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Published: October 2017
Reefers off the pace
It is generally accepted that the global GDP container trade growth multiplier has weakened in recent years, and this has important implications for future growth in overall shipping container demand. At the same time, however, the outlook for specials, such as tank containers and reefers, is determined not just by macro drivers, but by changes in shipping methods.
Speaking at the recent Cool Logistics conference in Algeciras, Spain, Robert F. Sappio, CEO of SeaCube Container Leasing, made the point that rapid growth in containerised reefer trade is primarily the result of cargo being switched from conventional reefer ships to containers.
SeaCube is a significant player in the reefer container market. Harrison Consulting data cited by Sappio indicate that, while the company is ranked fifth in the overall container leasing market, it is third in the reefer container market (after Triton and Seaco), and the first in gensets.
The data from Harrison also indicate that, while total seaborne reefer capacity is around 2.2B ft3, reefer containers now account for 2B ft3, or 90% of this capacity, while bulk reefer vessels account for 200M ft3, and their share will continue to diminish. Containerised reefer trade is expected to continue its long unbroken run of year-on-year growth (4-5% per annum over the last 25 years) and increase from 84 Mt in 2016 to ≥100 Mt in 2021.
However, Sappio also noted that reefer container production fell from 250,000 TEU in each of 2014 and 2015 to 114,000 TEU. This is counterintuitive since, given the expedited growth of ≥4% a year in reefer trades, “we should be seeing an increase in demand”. Year-to-date production in 2017, as of August, is estimated at 104,000 TEU, according to Harrison’s data, and 135,000 TEU by the end of October (WorldCargo News figure - see p30).
Quoting Drewry data, Sappio continued that, since the 2008-09 crisis, the operator share of the reefer fleet has reduced from 72% to an estimated 52% in 2017, while the lessor share has gone up from 28% in 2009 to 48% in 2017. The lessor share has increased in dry containers over the same period, but at a much slower rate. “If carriers are to allocate scarce capital to refrigerated equipment, ocean freight rates must return to levels that warrant such investments,” he observed.
Obviously reefer container capacity on new container vessels is increasing. The top five liner companies make up 54% of the global reefer container fleet, with Maersk Group alone, following its acquisition of Hamburg Süd, accounting for 24%, and CMA CGM, MSC and Hapag-Lloyd aggregating a 27% share. With Cosco absorbing OOCL, and the prospective formation of the Japanese ONE alliance, the top five liner companies will account for 60% of the global container fleet.
In this context, Sappio warned that carrier concentration and mega-alliances can limit choices and service differentiation. “Bigger ships and mega alliances can hinder service quality and exacerbate service quality, at least initially,” he said.
In fact it is well-known that reefer shippers dislike transhipment and the hub-and-spoke concept implicit with ULCVs, and they prefer direct calls at local ports to minimise land transport distances and thus the exposure of the cargo to spoilage. Actually, this is where bulk reefer ship operators have an edge. The figures for ‘top deck’ containers deployed by traditional reefer ship operators were not discussed by Sappio.
Similarly, the paper focuses on the liner companies, without looking at the new breed of container services offered by traditional reefer ship operators such as Seatrade, offering fast, direct connections on a liner basis. Liner companies recognise the need for differentiation, as illustrated, for example, by Maersk’s CRX Central America Express for the banana trade, deploying small (2,500 TEU) vessels between the Caribbean and Northern Europe.
Squeezing more on the vessel
Maersk Line has applied for a patent on a container vessel that can be configured to stow an extra two tiers of reefer containers in the bays below deck.
When carrying refrigerated cargo, the machinery on a reefer box needs to be accessible on the ship, so the container can be connected electrically, monitored, and repaired if needs be. Access is also required for watercooled reefers, if carried.
Maersk Line notes that the percentage of reefer slots on a vessel has generally increased over time, but there are two major limitations. Above deck, the lashing bridges and reefer access platforms are not high enough to reach the highest tiers. In the hull, the box beams of the vessel at the upper transverse of the bulkheads prevent access to the longitudinal ends of the reefer containers, effectively blocking access to the reefer machines.
By using a box beam design with a hollow cross section, the Maersk Line patent opens up access to the reefer machinery of containers stowed in the top tiers of the hold. A vessel could load an extra one or two tiers of reefer containers in the hold, depending on the exact design. Multiple designs for service openings and beam construction are covered in the patent application....