Economizing on Refrigerating Containers

At a time when the transport services market lacks demand, carriers have to resort to every possible measure to stay competitive. Their effort can be fruitful. For the current recession has compelled carriers to be more inventive and invest more in new technologies capable of bringing greater economy of resources. This is particularly true of transportation in refrigerator containers

Because it requires special equipment and electricity, refrigerated container transportation costs much more than conveyance in ordinary containers. It is possible, however, to economize significantly by using high-performance cooling equipment. According to Dermott Crombie, Vice President of Global Marine Solutions at Thermo King Corporation (manufacturer of transport temperature control systems for a variety of mobile applications), by using modern and resource-saving equipment, it is possible to save up to $2,000 a year on each container. He says: «Six years ago, a standard apparatus consumed five kilowatts of electricity to cool ordinary freight. Our latest model consumes less than two kw. One kw costs 15 U.S. cents. Thus, we can economize 45 cents every hour. An ordinary apparatus works 3,000 to 4,000 hours a year. Taking into account these 45 cents, we can save up to $2,000 a year on each container. We can achieve this result within just six years».

At first glance, these figures look quite imposing. However, one will naturally ask: Won’t this economizing affect the safety of the freight? According to Dermott Crombie, when accepting goods for transportation, the carrier must determine the correct temperature for keeping them en route. Producers of goods and makers of cooling equipment normally spend a lot of time and money on research to determine the correct temperature needed for keeping the products in good condition en route. If the correct temperature is maintained, the transported products will be delivered with minimal loss of quality, and their shelf life will be longer.

Pavel Shanaitsa, Director of TransContainer’s Representative Office in Berlin

The main challenge has always been to guarantee the safety of the cargo», – Dermott Crombie notes. «Only when the carrier is certain that the goods are safe will it be possible to speak about economizing electricity. Some carriers simply switch off the power unit of the refrigerator container in order to economize on transportation cost. Such a measure is rather dangerous and often ends up in spoilage of the cargo. If a small problem arises en route when transporting large consignments of perishables, it can develop into a big problem very quickly. It is therefore necessary to measure the temperature inside the container constantly throughout the route, and keep it at the required level. If we are carrying 20 tons of palletized bananas, all the pal-lets should have the same temperature. It is also necessary to achieve the correct temperature quickly. When carrying fresh fruits, each hour spent in the correct temperature is approximately equal to one day in the shelf life of the fruits». Power saving reduces harmful discharges into the atmosphere, for the amount of harmful substances is directly proportional to the amount of energy consumed. «Today the subject of the environment and harmful discharges is playing havoc on the nerves of everyone involved directly or indirectly in the transportation of perishables in refrigerator containers and in the transport business in general», says Pietro Sonza of Thermo King’s marketing division. «Everyone today is keeping an eye on environmental protection because it will affect every company in some way. This is particularly relevant in Europe and the United States, where harmful discharges bring a direct loss to every company, affecting its image. Many clients of the carriers are even prepared to overpay for a ‘cleaner’ delivery of the goods».

At present, it is rather difficulty to predict the direction in which the manufacturing technology of refrigerator containers will develop. «The direction will depend on many factors, such as legislation regarding harmful discharges into the atmosphere and noise level, the safety of perishable products, and the cost of fuel and energy», – Pietro Sonza says. «Each of these factors will play a specific role. The main task, however, is definitely to reduce harmful discharges into the atmosphere and introduce more efficient equipment. Companies will conceivably be more willing to invest in new technologies in the near future».

Yulia Razinkina, Exports Manager at Fruit Brothers Company (based in St. Petersburg), believes that as regards the transportation of perishables, the quality and cost of delivery are equally important to the consignee. She says: «If we only look at ways of cutting delivery and other costs, we may find ourselves in a very unpleasant situation, when the delivered goods seem to still have a sufficient shelf life, yet they have begun to spoil because their shelf life has become considerably shorter. In such a case, the carrier can incur heavy financial losses and stain its reputation. While economizing on refrigerating equipment obviously makes no sense, transportation cost is of no small importance. Every company must therefore find an optimal balance between delivery quality and its cost».

Pavel Shanaitsa, Director of Trans- Container’s Representative Office in Berlin, maintains that when a company considers the purchase of new containers, it must have in mind the project for which it is making the purchase, and decide for how long it plans to use the new containers. He says: «If it is a matter of economizing $2,000 a year on every container, then the payback period of this container must be calculated with account taken of a potential saving. Transportation in refrigerator containers costs more because special, higher rates are applied when the containers are conveyed by the main transport modes; also, containers require special handling and storage conditions at the terminal. Note that a client who hires a refrigerator container often attached primary importance to whether the refrigerated cargo conforms to the required norms upon completion of transportation; and that the cost of transportation of refrigerated cargo can exceed the average market rate».

Pavel Chichagov, Deputy General Director, Business Development at public company TransContainer, affirms that refrigerator containers are not the only way of conveying perishable goods. He says: «Consignors usually think that refrigerator containers must necessarily be used to carry perishable cargo. They are right in thinking so in most cases. However, in the specific climatic conditions of Russia, container manufactures and carriers display resourcefulness. Take, for example, a novel type of container called Thermos Container, designed and patented by TransContainer. It is used to carry a wide range of perishables, such as tinned foods, juices, beer, milk products, and more. It is a 20-foot, air-tight refrigerated container and can be transported on standard flatcars. The goods are loaded into a Thermos Container, in which the required temperature has been set, and are carried in it for a specified, limited time, depending on the type of cargo.

Pavel Chichagov, Deputy General Director, Business Development at public in erlin company TransContainer

The advantage of the Thermos Container is that it does not require an external power source; besides, it is simple to handle and use. Also, the cost of carriage in a Thermos Container is lower than the cost of transportation in a standard refrigerator container, because a Thermos Container carries mostly goods that have no need for constant temperature regulation, such as frozen meat. Thus, the tariffs for transportation in a Thermos Container are lower than for conveyance in a standard refrigerator container».

According to Pavel Chichagov, the Thermos Container service is popular among freight forwarders. He explains why: «In summer and winter, no perishable product that has limits as to storage temperature and transportation period can be carried in an ordinary container. For this reason, 100% of such products are transported in Thermos Containers. Undoubtedly, there is such a problem as falsifying the list of goods to be transported, marking perishables as nonperishables. It is usually difficult for the carrier to detect such incidents, especially if the container in sealed and the freight forwarder had provided false information about its contents».

12 million tons of perishables a year is transported by Russia’s railways

As for the cost of transportation in Thermos Containers, it is far higher than the cost of transportation in universal containers for three main reasons. Pavel Chichagov of TransContainer names them: «First, Russian Railways’ tariff for transportation in specialized containers is higher than the tariff for universal containers. Second, the manufacture and servicing of specialized containers cost more. Third, the transportation logistics of Thermos Containers has its own specifics. The point is that the bulk of the freight traffic is in the west-east direction, moving from Central Russia to the Siberia and Far East regions. Goods rarely move from east to west; consequently, nearly all eastbound containers return empty. Owing to all these factors, the cost of transportation in Thermos Containers comes up to double the cost of transportation in universal containers. Nonetheless, the cost of transportation in Thermos Containers is lower than the cost of transportation in standard refrigerator containers, not least because the terms and conditions of transportation in Thermos Containers are more flexible.

Perishables transported by Russia’s railways total approximately 12 million tons a year. And there has been a growing demand for the transportation of small consignments of perishables. Therefore, Pavel Chichagov says, it makes sense to use Thermos Containers. Their use will be particularly profitable because they can be dispatched in small numbers, even a single container at a time, whereas flatcar-loads of standard refrigerator containers, starting with 10 to 12 flatcars (that is, with at least 20 containers) must be dispatched at a time to be economically worthwhile.