New perishable line spells out plans A BRAND new shipping line entering the SA fruit bulk export market - and talking about getting a 50% share of the country's current annual fruit export crop! This sort of expectation - in a sea trade already tightly controlled by some of the international giants in bulk sea transport - raised a number of eyebrows when FTW first investigated the issue.
But Rainbow Shipping - owned 65% by United States Reefer Express Line and with a 35% black equity involvement - has announced it will do just that.
Talking to FTW about how, and answering some of the industry criticism already levelled at Rainbow, was Lionel Jacobs, c.e. of Siphu Melele Investments in Cape Town. This company, along with Saharwu Investments (the investment arm of the railways and harbour workers union), Nozala Investments (a black-led, women's investment group) and DLJ African Merchant Bank (the DLJ standing for the US-based Donaldson, Luskin & Jenriette) are the black equity holders. Siphu Malele currently houses Rainbow's SA office, and is administering the early stages in the development of the new line.
Here is what was said.
FTW -You are talking about getting 50% of the market, to justify building five new ships for the trade . But you are facing the might of Universal Reefers (a joint-venture between Safmarine and Outspan/ Unifruco) amongst others. Isn't this a bit of a high expectation? JACOBS - That is the intent. We are trying to get as much as we can.
The five ships are necessary for us to schedule a weekly sailing.
But remember, by the time the ships come on-line it will be 1999/2000. By that time, the present 50% will only be 30% of the total fruit exports from SA.
We would also be working in co-operation with the exporters and the PPECB (Perishable Products Export Control Board) - and would adjust vessels to suit market demand.
Also, there are additional markets opening up all the time for SA fruit. FTW - It has also been reported that you are looking at ships of around the 12 000 ton mark. Others in the industry tell us that this is more than twice the size of the present vessels on the trade. How do you justify this? JACOBS - The larger the vessels, the more economical they are as far as rates are concerned.
But we are also trying to complement the likes of Universal, not compete.
We are looking at using innovative side-loaders - ships that do not have to rely on dockside cranes, or on-board loading gear.
The loading and discharge speed on vessels like this is increased enormously. You are looking at a 140 pallets per hour loading/discharge rate for each entry port in the vessel - and that's very fast.
They're also not bothered by the wind. So we can therefore guarantee delivery times much more accurately than those vessels which have to use overhead cranes. FTW - In your prospectus, you said that you were seeking government concurrencefor a long-term freight contract. Who have you been talking to at government level, and what has been the reaction? JACOBS - That's the PPECB.
They were established by an act of government. As far as that's concerned, the act states quite clearly that the PPECB will control the shipping space available for the fruit export market. FTW - So you will be bidding along with all the other shipping lines at the PPECB's annual freight negotiations? JACOBS - Yes. That's the case. FTW- It has been reported that the Reefer Express holding of 65% of the shares will, in the future, be reduced to 25%, and that the remaining 75% will be floated on the Johannesburg Stock Exchange (JSE). Is that definitely the intention? JACOBS - We first have to get the line up-and-running. At the beginning this will require US Reefer Express Lines to have a substantial shareholding and to make their technical expertise available to Rainbow Shipping to run it successfully.
But it will eventually go on the JSE - Yes. FTW - Where are you going to find the sort of experienced and skilled people you'll need to run such a line? JACOBS - The management will be SA-based.
Reefer Express has the technical expertise in this field, and that will be behind us when we first get the line going. We would have all our management trained by them, to gain all they know about all the special ways of running a reefer express operation.
