By Keith Norbury
It was a challenging year in 2012 for the reefer business, says the Marketing Manager of Refrigerated Services for Canadian National Railway. Markets were flat, largely because of economic influences, such as “pressure on ocean freight rates for the steamship lines because of additional capacity,” said Girish Nair, who was appointed to that position with CN last year. “As a result they were not getting the desired revenues on the reefer containers,” Mr. Nair added. “It’s an expensive asset. So what they started doing was consolidating their exposure on the reefer business. And when our partners and customers start doing that, it reflects on our business as well.”
Russia also implemented new rules and regulations, he pointed out. While CN did not reveal cargo volumes, figures for Canada as a whole show that beef exports to Russia dropped in 2012. Exports to Russia totalled 6.28 million kilograms valued at $15.49 million in 2012 compared with 8.15 million kilograms valued at $23.69 million in 2011, and 9.49 kilograms with a value of $23.77 million in 2010. Canadian pork exports to Russia increased in 2012, however, to $419.9 million from $358.7 million in 2011, and just $101.8 million in 2009.
Total global exports of Canadian pork were down a fraction in 2012, to $3.2 billion, while exports of Canadian beef declined to $1.2 billion from $1.33 billion in 2011. (See related article for more on beef, pork and seafood imports and exports.) The strong Canadian dollar also had an impact on keeping those markets flat, Mr. Nair said.
CN launches CargoCool
To counter those trends, CN is rolling out a program called CargoCool to expand its reefer services. CN has already launched CargoCool at Port of Montreal, including a connection with markets in the Canadian Midwest such as Calgary and Edmonton, Mr. Nair said. “We upgraded our cold chain logistics to a more robust level in order to handle complex commodities such as chilled pork and beef,” Mr. Nair said. “And we also expanded it to new corridors and markets.”
Many steamships lines have started bringing in non-operating reefers and using them as dry boxes to carry non-refrigerated cargo, he explained. This enables the carriers to earn dry cargo rates from those imported reefers rather than just bringing them to Canada empty in order to have them available meet the export needs.
In a CN video posted on vimeo.com, J.C. Chartrand, Director of Sales for CN Intermodal International, said that the CargoCool services will enable customers “to achieve new targets, meet new market demands and allow importers to move their refrigerated cargo directly to the U.S. Midwest. Of course, at the same time, we’re going to do export cargo from the Midwest going back to either Asia, Europe, South Africa or South America.” Mr. Nair said test loads are already happening on the cross-border service to the U.S. The ultimate objective is to provide access to global markets through all of CN’s gateway ports, such as Prince Rupert, Vancouver, and Halifax.
Patrick Bohan, Halifax Port Authority’s Manager of Business, said CN has recently been heavily promoting CargoCool. “Although they move containers in both directions, it’s really on the import side that they’re making the case for expedited transit times,” Mr. Bohan said.
$9.5 million cold storage facility coming soon to Halifax
Halifax has 1,000 reefer plugs at the port. Those plugs are evenly divided between its two container terminals – the South End Container Terminal operated by Halterm, and the Fairview Cove Container Terminal operated by Ceres Corp. The port handled in excess of 15,000 TEUs of reefer exports in 2011, which accounted for 9.1 per cent of the its total containerized export tonnage. That included seafood, french fries, and blueberries. The port handled a total of 416,572 containers in 2012, up slightly from 410,649 in 2011.
“Portwide we’ve geared up to service this segment particularly well,” Mr. Bohan said. While he did not have comparisons with previous years because a new system has been put in place for recording cargo volumes, he said, “our sense of it is that these cargoes are more important than ever.”
Later this year, a new cold storage facility is slated to open about 15 minutes from the port in the Halifax Gateway and Logistics Park. The $9.5 million Nova Cold Storage facility will have 60,000 square feet of federally inspected trans-loading cold storage space, enough for 250 ocean containers and 5,500 pallets, says a Halifax Port Authority news release.
“One of the things we’ve had discussions about with Nova Cold is aligning their business with the container carriers here so they could do trans-load in an environment where the temperature chain was respected,” Mr. Bohan said. For example, seafood could be trucked in from anywhere in Atlantic Canada to the facility, where it would be unloaded while in cold storage. “And then it can be packed into a container without any deterioration of the product,” he said.
Meanwhile, the G6 Grand Alliance Service, made up of six major carriers, announced in March that Halifax will become a port of call. (The alliance consists of Hapag-Lloyd, NYK Line, OOCL, APL, Hyundai Merchant Marine, and MOL), which means that ten of the world’s 15 largest container lines will now call at Halifax, Mr. Bohan said. The vessels have capacities ranging from 4,500 to 8,000 TEUs, with many of those containers being reefers. “Some of the container ships we’re seeing nowadays are so big that they can have 550 refrigerated containers on them,” Mr. Bohan said. “So you can quickly see why you need to have a lot of plug capacity on our terminals.”
CN ready to roll out reefer service at Prince Rupert
Plug capacity isn’t everything, though. Port of Prince Rupert has 72 reefer plugs at its Fairview Container Terminal. However, it has very low volumes of container traffic. “We have not imported any refrigerated containers since the opening of the container terminal (in 2007),” Michael Gurney, Communications Manager for Prince Rupert Port Authority, said in an email. “We have exported 74 TEUs of containers filled with frozen fish over the course 2010 and 2011. Destinations for the frozen fish included Japan, China, Thailand, and Korea.”
Mr. Nair said CN is ready to ramp up reefer services at Prince Rupert “as soon as our partners are.” Again, stumbling blocks are the sluggish economy and depressed freight rates that have discouraged steamship lines from expanding reefer services, he said. “But given the potential growth within Asia, we are positive that we will be able to collaborate and start a reefer service soon,” Mr. Nair said. “Our final objective is basically to be able to give the trading community within Canada more options to access their key markets.”
Attempts to reach spokespersons at Port of Montreal and Port Metro Vancouver to talk about the reefer trade at those ports were not successful.
Canadian Pacific Railway was not able to make anyone available to talk with Canadian Sailings about CP’s reefer business, either. However, Media Relations Manager Kevin Hrysak did provide some information by email about CP’s international and domestic reefer intermodal trade.
Reefer business a “strong niche” market for CP too
On the international front, for example, he described import and export reefer business as “a strong niche market” for CP and its ocean carrier customers.
“Refrigerated marine containers move on freight train via two options – CP supplied gensets (power cars) that have capacity to power up to 16 containers at a time, or by private, clip-on power refrigeration units that are used for individual containers use in lower volume lanes.” It’s a similar situation at CN, where its gensets can power up to 17 containers. In 2012, CN also acquired clip-on gensets as earlier planned. They provide flexibility as well as enabling test runs of new markets that have predominantly lower volumes, Mr. Nair said.
The clip-ons are also ideal for source loading, which appeals to beneficial cargo owners. “You can have intermodal boxes going right into their facility. It gives them the comfort of additional security when the cargo is loaded inside the facility,” Mr. Nair said. “The container is sealed and the next time the container opens is at the destination in their consignee’s warehouse.”
Mr. Hrysak noted that telemetry devices in CP’s gensets allow monitoring of such vital signs as “the operation of the generators’ two diesel engines,” fuel levels, and the exact location of the container at every point in the rail network.
Recent generation gensets have smaller engines, making them more fuel efficient than older models, Mr. Nair pointed out. The new clip-ons, for example, have achieved fuel efficiencies of over 15 per cent.
“Improved rail transit times and strict maintenance schedules ensure that equipment is working safely and efficiently and departure times are strategically planned in order for customer containers to meet exporting vessels,” Mr. Hrysak said. “The faster transit times shorten the time from production to market, allowing our customers to charge premium rates for certain products such as chilled pork moving from Montreal and Winnipeg to Asian markets, for example.”
Domestically, CP operates one of the largest fleets of 53-foot containers in Canada, Mr. Hrysak said. About half of those containers were renewed in 2012, “making the fleet one of the most technologically advanced fleets in the marketplace today.” The combined improvements resulted in 13 per cent growth in CP’s refrigerated freight volumes in 2012 compared with 2011.