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Reefer box growth rate could triple in 2020

Cool Logistics conference hears how the IMO sulphur cap could cause a massive spike in demand for reefer container services.

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Anne-Sophie Zerlang Karlsen, speaking at Cool Logistics 10th Anniversary conference in Antwerp
Anne-Sophie Zerlang Karlsen, speaking at Cool Logistics 10th Anniversary conference in Antwerp

In a presentation at this weeks Cool Logistics conference in Antwerp, Anne-Sophie Zerlang Karlsen, Head of Global Reefer Management at Maersk Line said the reefer container shortage experienced in recent years could get much worse as aging reefer vessels are forced out of the market by emissions regulations.

 

Karlsen noted that the global reefer fleet has been under pressure since 2015 as reefer cargoes have grown by 5-6%, while the fleet has only increased by an average of 2.8%, and carriers have struggled to position equipment out of Asia.

 

In 2020 regulations on sulphur emissions will come into effect, forcing the shipping industry to use higher cost fuels with a maximum 0.5% sulphur content, or adopt other expensive alternatives such as LNG or scrubbers. Karlsen said while there is some investment in new reefer vessels “a strong hypotheses is arising" that the sulphur cap will drive further containerisation as owners of older reefer ships take tonnage out service rather than invest in upgrades.

 

Maersk has been running the numbers, and Karlsen stressed that its figures are an “early estimate only”, but the IMO regulations could propel reefer container demand growth from 6% in 2018 to 12% in 2020, and as high as 15% in 2021 and 2022, she said. To further compound the problem Asia is the fastest growing market, which will increase reefer box turn times for all carriers.

Maersk Line's estimate of the impact of the IMO 2020 sulphur cap on reefer container demand
Maersk Line's estimate of the impact of the IMO 2020 sulphur cap on reefer container demand

“If this holds true, the global equipment investments will need to triple”, Karlsen said. Questioning whether carriers have the capital to support this level of investment, Karlsen said the problem is one that must be solved by all players across the supply chain.

 

On the supply side reefer container and machinery manufacturers will also come under pressure if demand increases threefold. Reefer box orders have increased significantly in 2018, and manufacturers are on track to turn out 300,000 TEU of new reefers this year. This is still well sort of the estimated 430,000 TEU of capacity the reefer box factories, which are now all in China, can produce in a year working two shifts. If demand were to suddenly triple, however, the industry would be facing a significant supply problem, and reefer container prices would very likely rise.

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