Davao-based Reefer Express Line Filipinas plans to start a monthly reefer service from General Santos City in Mindanao to the US
MV Cool Spirit will berth in Long Beach, California in the West Coast and then Philadelphia in the East Coast
Reefer Express will charge 50% to 60% less than prevailing rates
Transit time for the direct service is 26 days against 40 to 50 days for lines that stop at transshipment hubs
The reefer vessel can carry more than 800 twenty-foot equivalent units
Reefer Express has put off plans to revive the Davao–General Santos–Bitung route with a stop in Iran because of US sanctions
Davao-based Reefer Express Line Filipinas, Inc. plans to start a monthly service from General Santos City in Mindanao to the US to help manufacturers facing global shipping problems.
Reefer Express chief executive officer Felix Ishizuka said the MV Cool Spirit will berth in Long Beach, California in the West Coast then Philadelphia in the East Coast.
“We’ve been asked by several cargo interests to provide this service. As you may know, the worldwide shipping market right now is in chaos,” Ishizuka said in a statement on the Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area website.
Disruptions in supply chains in the wake of the COVID-19 pandemic as well as a surge in demand have resulted in port congestion, shipping delays, and high freight rates worldwide.
Ishizuka said many container lines now skip calls to the Philippines to prioritize ports that provide better revenues, leaving local manufacturers struggling to find ways to ship their goods overseas. Even if companies do get a slot on container lines, they must face high fees.
“If you have big operations producing foodstuffs for markets like the US and you have no shipping, you will end up piling up inventory in your warehouse,” Ishizuka said.
Given that the shipping problem is expected to last three to five years, he said manufacturers need to strategize to ensure their logistics needs are met since the air freight market is also uncertain because of the pandemic.
The MV Cool Spirit’s maiden voyage to the US was scheduled to launch either last August 28 or 29.
Ishizuka said MV Cool Spirit, a reefer vessel that can carry more than 800 twenty-foot equivalent units, will carry manufactured goods like canned foodstuffs, desiccated coconut, hardware products, and garments.
Transit time will take just 26 days as the maiden voyage is a direct service. Reefer Express noted other shipping lines usually take 40 to 50 days to reach the US with stops at transshipment hubs such as Hong Kong, China, or Singapore before proceeding to the US.
Ishizuka said Reefer Express will charge 50% to 60% less than prevailing market rates for the service.
He encouraged Mindanao-based exporters to support the service so they can ship goods to the US in time for the Thanksgiving and Christmas holiday buying. He said Reefer Express is also looking at transporting goods back to the Philippines from the US market.
Reefer Express, meanwhile, has put off plans to revive the Davao–General Santos–Bitung route, including a stop in Iran, due to regulations in Iran that require all vessels calling that country’s ports to deal with local insurers for indemnity insurance. If ship owners deal with Iranian insurers, however, they run the risk of being blacklisted due to US sanctions on Iran. Blacklisting means a ship owner cannot call other international ports.
Iran is under sanctions from the US since 2018 following then US President Donald Trump’s withdrawal from the Joint Comprehensive Plan of Action, a 2015 deal by Iran and several world powers including the US which placed significant restrictions on Iran’s ability to develop nuclear weapons in exchange for lifting economic sanctions against Tehran. Trump claimed the deal failed to curtail Iran’s missile program and regional influence. The reimposition of sanctions means it is illegal for non-US persons to engage in a wide range of commercial activities with Iran, including the provision of underwriting or insurance and reinsurance services.
“So if the regulation now in Iran calls for having a locally run insurance company and you are trading worldwide you will not be able to call other ports,” Ishizuka said.
Reefer Express earlier announced it was reviving the route with a stop in Iran so it could transport bananas as “backbone” cargo to the Middle East in the hopes of making the service profitable and sustainable.
Ishizuka said adding other Middle East stops is not feasible because countries like Saudi Arabia and the United Arab Emirates get their bananas from India or Ecuador.
If the situation in Iran improves, he said Reefer Express would push through with the planned route.