|9.4 Economic aspects of CA transportation|
|Two points of view need to be taken into account when examining the economic feasibility of using CA: On the one hand, the point of view of the consignor, i.e. the owner of the load and on the other hand, that of the container owner, generally the shipping company or leasing company. It can, of course occur that these interests coincide, as in the case of the large fruit companies, for instance, who possess their own container stocks.
For the normal consignor, who purchases transportation services from a shipping company, the question is whether the higher costs for CA transport are justified. These increased costs are currently around $ 1,500.
If the load comprises a product that cannot be transported in the same quantities in normal refrigerated containers, but for which sea transportation under CA is a realistic possibility, the situation is as follows: At an estimated air freight price of $ 1 per kg, for instance, transportation of a load weighing 20 metric tons costs $ 20,000. Transport costs for a normal sea container are currently approx. $ 3,000 through $ 4,000, depending on the transport route. For CA, a further $ 1,500 must be added, thus giving overall transport costs of around $ 4,500 through $ 5,500. The cost benefits are obvious.
If the goods could be transported in a normal refrigerated container, but where a certain level of waste and loss of quality are inevitable, CA could be used in an effort to reduce the levels of waste or to improve quality.
If one assumes that most fruit and vegetables are relatively cheap products (compared with meat or fish) with purchase price of around $ 0.50 per kg, the waste quota must be reduced by around 3 metric tons for a 20 metric ton load in order to offset the cost of CA. Waste quotas of this kind (15%) are, however, unusually high for refrigerated transport and are only observed with a limited number of products. These include avocados, mangos, stone fruit and asparagus. These products already represent the highest proportion of goods transported under CA conditions.
If the primary benefit of using CA is the improvement in quality, the increased revenue generated by higher quality goods must be around $ 0.07 per kg for a load weighing 20 metric tons. Whether this increased revenue can be realized, however, also depends on other market issues.
The question of recouping costs is slightly different from the point of view of shipping companies. They must weigh up investment and operating costs against the increased revenue which can be generated from CA transportation.
The key issue here is on how many CA transport operations can be carried out annually with such containers. As has already been described in Section 7.2, containers transporting bananas to North America can complete around 12 - 15 refrigerated voyages a year, the average for all refrigerated containers, however, is only around 2.9 voyages a year, and for shipping companies who use only containers, only around 2 voyages. These figures take account of all types of refrigerated goods, thus they include in particular frozen products, which comprise around 50% of the market for normal container shipping companies, and for which CA transport provides no benefit. If one also takes into account that by no means all fruit and vegetable shipments will be carried out under CA, but rather only around 50% of them, it becomes clear that, statistically, the possibility of using such a container for CA shipment will only occur once every two years. This means that in a case like this, depending on the manufacturer of the CA unit, between four and ten years will be required to recoup the original investment, and this calculation does not take account of the cost of borrowing or maintenance costs. If one also assumes that the operational life of this kind of CA container is between 5 and 8 years (not to mention the possibility that the CA unit is still operational, but the leakage of the container is unacceptable), it becomes clear that for the average container, the installation of a CA system is no longer economically viable.
The ideal customers for CA containers, are therefore owners that regularly and exclusively transport CA products. These are primarily the large fruit companies. Due to the fact that centralized CA systems are used on refrigerated cargo ships, however, these companies also use these centralized systems extensively for transporting containers.
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