HL_Insights_Cocoa_Schwesig

The Rise of Cocoa

Hapag-Lloyd ranks among the market leaders in the transport of cocoa. The complex logistics related to this sensitive natural product have been the day-to-day business – and passion – of Holger Schwesig, head of Hapag-Lloyd’s Switzerland office, for over a decade.

In 2016 Hapag-Lloyd has transported almost 40,000 TEU of cocoa beans and cocoa products worldwide. As head of Hapag-Lloyd’s Switzerland office in Basel, Holger Schwesig oversees business with global customers like Nestlé. At roughly 12 kilograms per year, the Swiss continue to have the world’s highest per capita consumption of chocolate, and the country is also famous for its high-quality chocolate products . In an interview, Schwesig explains how Hapag-Lloyd addresses the challenges in the cocoa value-added chain with innovative solutions and customized products.
 

Holger Schwesig, Area Manager Switzerland Holger Schwesig heads Hapag-Lloyd's office in Basel, Switzerland

How important are liner shipping companies to the cocoa trade?

Since cocoa is predominantly consumed in the Western Hemisphere, but grown in Africa, Latin America and Asia, transport service providers are enormously important for the international cocoa trade.

What’s exciting is that, even today, cocoa isn’t exclusively shipped in containers. This mainly has to do with the lot sizes, but also to the destinations. For example, if a lot of over 5,000 metric tons of cocoa beans is supposed to be shipped to a certain destination, a chartered bulk carrier can be an attractive option. Our customers mainly use this option during the peak season, between January and April. But the container is also gaining ground in the transport of cocoa. The flexibility of liner services is especially attractive for smaller or time-critical lots. In the long run, the container will also replace bulk shipping in the transport of cocoa, too.

However, in addition to the beans, we also ship semi-finished cocoa products, such as cocoa butter, cocoa powder, cocoa paste and even cocoa husks. As with coconuts, everything is used with cocoa. Processed products are almost exclusively transported in containers.

In addition to the beans, Hapag-Lloyd is shipping cocoa butter, cocoa pulver or even cocoa husks. In addition to the beans, Hapag-Lloyd is shipping cocoa butter, cocoa pulver or even cocoa husks.

What are the challenges that have to be overcome when transporting cocoa?

The peak season of the cocoa harvest lasts from November to May, so it happens when it is winter in Europe. This means, for example, that the containers have to be loaded in Abidjan (Ivory Coast) when it is 35 degrees Celsius (95 degrees Fahrenheit ) and unloaded in Amsterdam when it is minus 5 degrees Celsius (23 degrees Fahrenheit). Cocoa is a natural product and contains moisture. Despite the huge differences in temperature along the voyage at sea, it’s necessary to keep the cocoa beans dry and to protect them from damage caused by moisture.

On top of that, cocoa beans are known for their strong hygroscopicity (editor’s note: the ability to absorb moisture from the air) and for releasing a lot of water vapor during transport. Observation has found that their water content can decrease by between 1 and 3 percent on longer voyages. Cocoa beans that have not been fermented and dried well tend to release water vapor more easily. That makes transporting them particularly demanding.
 

How does Hapag-Lloyd make sure that the sensitive cocoa beans arrive undamaged in the port of destination?

The goods should be stowed below deck and not close to any heat sources, as there is a risk of self-heating and post fermentation. Below deck, external weather conditions no longer directly affect the containers, so the temperature and humidity levels of the air in the hold become the key external influences.

Only a limited amount of humidity can escape from the container. For this reason, containers that are used to transport cocoa should by all means be lined with double corrugated cardboard. In addition, we recommend the use of so-called dry bags. We’re all familiar with such dry bags for absorbing humidity in miniature form, such as in shoe boxes. The same agent is used for containers – just in much larger sacks. We secure up to 12 of the 2-kilo sacks in a single container.

Cocoa trees grow in hot, rainy tropical areas. Cocoa trees grow in hot, rainy tropical areas.

Who are your most important customers?

The international cocoa market is dominated by five trading houses. We provide services to Zurich-based Barry Callebaut, one of the global market leaders in the cocoa trade. Other important customers from the Swiss market are Cocoasource and Swiss Trading Solutions, but also the well-known producers Nestlé and Lindt & Sprüngli.

What are the most important export and import countries?

4.3 million metric tons of cocoa are exported every year. Most of it is grown in West Africa. Taken together, Ivory Coast and Ghana account for almost 60 percent of global production.

Cocoa importing is largely controlled from Europe, with the EU accounting for over half of global cocoa imports by monetary value – though it’s also important to mention that the quality of the cocoa usually determines its destination. The most important ports for importing cocoa into Europe are Amsterdam, Antwerp and Hamburg.

The Hapag-Lloyd vessel "Chicago Express" in the port of Hamburg The Hapag-Lloyd vessel "Chicago Express" in the port of Hamburg

How is Hapag-Lloyd positioned in this market?

Hapag-Lloyd numbers among the world’s four largest shipping companies involved in transporting cocoa. Since 2007, we’ve be continuously expanding our "footprint" in West Africa, the largest export region for cocoa. Today, we share the market with the three largest shipping companies – Maersk, MSC and CMA CGM – as well as with the bulk shipping industry. Even though we’ve only been on the African market for less than ten years, we’ve still been able to secure a very good starting position for future growth.

In your view, how much further market potential is there?

Global demand for chocolate is constantly rising – and not only in Europe and North America, as people are acquiring a test for it in Asian countries, too. In addition, cocoa is being used as a finishing touch on more and more products . Possible new uses increase demand, as well.

This trend is also reflected in the transport of cocoa. In recent years, different liner shipping companies have tried – to varying degrees of success – to gain a foothold in the African market. Hapag-Lloyd has been an established player on the market since 2007, and it’s expanded its presence since then with great success.
 

Hapag-Lloyd's WAX service
The WAX service offers direct calls between North Europe and West Africa

What advantages does Hapag-Lloyd enjoy vis-à-vis its competitors?

In transporting cocoa, the crucial factors are short transit times and a service without transshipment in order to avoid any moisture-related damage.

Besides that, the proper use of “dressings” – that is, the corrugated cardboard and dry bags – is very important. In this regard, cocoa customers are demanding, as every subsequent adjustment and delay means money. Hapag-Lloyd offers a premium service with comprehensive tracking possibilities as well as a global network.

In this case, we focus on customized solutions for our cocoa customers. For example, the WAX service – which we operate ourselves – was especially developed for our cocoa customers. This is a direct service from West Africa to Europe offering the best transit time on the market.

What’s more, our customers value having access to local Hapag-Lloyd employees. In Switzerland, for example, we can ensure and take advantage of this proximity to customers thanks to the work of the Commodity Competence Center in Basel. Hapag-Lloyd has set up competence centers like this one all across the world in order to offer optimal services – with concentrated specialist know-how from locally based experts – to “commodity” customers. In Switzerland, this is particularly for cocoa, coffee and cotton.
 

What steps is Hapag-Lloyd taking to boost its standing in the cocoa trade?

The competition never sleeps in cocoa shipping, either. To hold on to and further expand our competitive advantages, we have to tap additional source markets and ports, especially in West Africa, and to be locally active with experts and our own services.

What’s more, we are constantly working on innovative additional services to set ourselves apart from the competition. For instance, using self-developed, customized “inlets,” we can achieve significant cost reductions and make it possible for customers to enjoy an ideal solution for transporting cocoa out of West Africa. And with customers from the Dominican Republic, to name another example, we’ve been successfully testing some new dehumidification agents.

Our statistics speak for themselves: For more than three years, we haven’t recorded a single case of major damage in cocoa shipping. We’re constantly committed to going the extra mile for our customers. What Hapag-Lloyd has achieved over the last decade in cocoa shipping is impressive, and I look forward to future development .
 

 

 

As head of the Hapag-Lloyd Area in Durban, South Africa, Holger Schwesig had a major influence on the company’s market presence in cocoa shipping. During six years of making visits to customers in the source countries of West Africa, he honed his expertise in the cocoa business. This expertise now benefits both him and his customers on the import side in Switzerland, where he has been in charge of the Hapag-Lloyd office since June 2015. Schwesig studied business administration in Germany and England. In 2004, after holding positions in the tobacco and rail-logistics sectors, he started his career at Hapag-Lloyd’s offices in Hamburg. Between 2005 and 2009, he managed the Area Med agents in Italy.

                    

 

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