Port Houston approved for cold treatment cargo
NewsPort Houston is now approved by APHIS to handle cold treatment cargo, allowing it to manage a wider range of temperature-sensitive perishable products.
Reefer trade recovery in motion
Despite ongoing and severe geopolitical and environmental challenges, the seaborne trade in perishable products has staged a strong recovery this year. Further growth is expected as inflation rates across the world continue to fall and expenditure on protein, fresh fruit and vegetables rises.
In the first six months of 2024, trading volumes were up an estimated 2.8% on the corresponding period of 2023. A much stronger outcome (+1.6%) is now expected for the full year as the sector’s core cargo groupings, including meat, bananas and fish, post consistent, albeit low, rates of growth for the remainder of 2024.
In addition, pharmaceutical companies are continuing to transport more of their products by sea while ongoing growth in the global e-commerce sector is also benefitting the perishables cargo sector.
Moreover, South Africa appears to be enjoying a good citrus exporting season while in some developed markets there is clear evidence that consumers are moving back to buying premium produce rather than essential and staple items only. These factors are all boosting trading volumes.
Consistent growth
Even stronger growth is expected in the medium term with Drewry’s latest Annual Reefer Report citing average annualised rates of growth of 2.2% up to 2028. That would result in 152.5 Mt of cargo being shipped. It will be markets such as China, India and the US that will drive this level of growth over this period of time.
As in previous reports, Drewry expects reefer containers to increase their share of the market. This year, they will account for 89% of the total seaborne trade in perishable products, up from 87.9% in 2023, with this rising to 91% in 2028.
Box shortage
This level of improved confidence has resulted in a significant increase in the demand for new reefer containers although the war between Israel and Gaza and subsequent closure of the Suez Canal has played its part. With most vessels on Asia/Europe and some Asia/North America trades being rerouted via the Cape of Good Hope, adding eight to 10 days to each east-and westbound voyage, containers, including reefer units, are spending longer at sea and in congested ports/terminals.
In some regions of the world, the availability of reefers has become a real issue with cargo movements being affected. In India, seafood exporters based in the south of the country are facing immense difficulties securing good quality reefer containers while India’s huge pharmaceutical industry is also facing challenges. India is one of the world’s largest manufacturers of generic medicines and vaccines and reefer containers are essential in moving these products around the globe.
Overall, container productivity levels have eased by between 15% and 20% this year. While that is not as steep a decline as that registered during the COVID pandemic, it still means more equipment is needed to move the same volume of cargo.
In H1 2024, approximately 121,000 reefer TEUs were delivered. This was up just over 7% on the 113,000 TEU produced in the same period of 2023 (see Table). Interestingly, deliveries so far this year have been almost equally divided between ocean carriers and lessors with the main buyers including:
- SeaCube Container Leasing – 22,500 TEU
- Evergreen Line – 20,000 TEU
- Florens Asset Management, the Hong Kong listed lessor, which is a part of the Cosco Shipping Group – 17,400 TEU
- Ocean Network Express – 13,100 TEU
- CMA CGM – just over 9,000 TEU
The newbuilds market remains robust with Seaboard Marine among those companies recently confirming orders for new equipment. The contract, which has been signed with Maersk Container Industry (MCI), is interesting in that it involves the leasing company Global Container International from which Seaboard will long-term charter the containers.
A total of 1,000 x 40ft high-cube Star Cool units will be produced, a proportion of which will feature MCI’s controlled atmosphere solution. They will also be installed with the manufacturer’s Sekstant remote reefer monitoring system.
Building spree
Most factories in China are expected to remain busy until the country’s Golden Week holiday in October, with 278,000 reefer TEU expected to be produced for the full year. That would be up 24% on 2023’s level.
Increasingly, ocean carriers are buying more energy efficient reefer containers and switching to more environmentally friendly refrigerants as regulations across the globe tighten. Ocean carriers are also investing in modern infrastructure and in services that can offer support to their key reefer shipping operations and help establish longer-term relationships with their customers.
Over the past 12-18 months, Maersk has opened new cold stores in Bogota, Colombia; Ruakura Superhub, near Hamilton, New Zealand; Dubai Industrial City, UAE; King Abdulaziz Port in Dammam, Saudi Arabia; and the US city of Houston. The company has also announced the development of a new 260,000ft2 temperature-controlled facility at Mehsana in Gujarat province, India. This facility is being built in the city’s Fanidhar Mega Food Park and will feature 14,700 pallet positions. It will use an ammonia refrigeration system. Ammonia is a natural gas with zero global warming potential.
Meanwhile, MSC is working in conjunction with its logistics entity Medlog on several projects, including the development of new cold store facilities. Recently, Medlog commenced work on a 291,000ft2 temperature-controlled facility in the US South Atlantic port of Savannah. It is being developed to help MSC expand its presence in the important and expanding US export meat trades. It will mainly handle and store poultry, pork and beef from farmers/producers located in the Midwest and Southeast regions of the US.
The cold store will feature 42 loading docks, approximately 20,000 freezer/cooler pallet positions, and it will be capable of blast-freezing up to 3M pounds of meat a day. The facility, which will be able to handle both frozen and chilled cargoes, will also have a direct rail connection. It is due to open in mid-2025.
“This latest investment in the state of Georgia is another example of how MSC continues to expand the global reach of US exporters and importers by enhancing landside capacity,” said Fabio Santucci, president and CEO of MSC’s US operations. “We’ve designed this cold storage facility with the necessary specifications to enable trade opportunities for businesses as far inland as the Midwest. MSC has been serving US businesses nationwide since 1985, and this facility allows us to further strengthen that decades-long partnership.”
Earlier this year, MSC opened its new 15,000m2 cold store in Durban, South Africa. Speaking at the official opening ceremony, Soren Toft, CEO of MSC, said: “This investment marks an exciting new milestone for exporters and importers of fresh produce across South Africa. It exemplifies our ongoing efforts to provide value-added services to our customers, while contributing to the development of the local economy. We want to help South Africa achieve its vision to become sustainable, economically prosperous and self-reliant.”
The cold store has been built with flexibility and operational efficiency in mind. It features rooms that can be easily converted into handling chilled and frozen goods, while its warehouse management system is fully integrated with South Africa’s Perishable Produce Export Control Board’s database to ensure regulatory compliance and full traceability of the cargo being handled.
The facility has a capacity of 8,000 to 10,000 pallets and it has been developed to improve the storage and distribution of imports, such as chicken from Brazil, the US and Poland, and the export of citrus fruit to markets in Europe, Asia and the Middle East. It represents an investment on the part of Medlog of approximately ZAR350M (US$19.2M).
On rail in Korea
In another development, South Korean shipping company HMM has signed a Memorandum of Understanding (MoU) with Korea Railroad Corporation (KORAIL) to increase inland rail transportation.
The MoU covers utilising domestic rail infrastructure for refrigerated cargo and establishing an ‘Intermodal One-Stop Transportation System’ that seamlessly connects rail and maritime freight. It includes improving a new container yard, which KORAIL is scheduled to secure, building a new distribution hub and collaborating to build an international multimodal transport network for reefer containers.
Move to -15°C coalition gains traction
The Move to -15°C coalition which was launched by DP World at the COP 29 summit in Dubai in November 2023 is gathering momentum. Its objective is to cut the temperature at which frozen food is stored and transported globally from -18°C to -15°C. The -18°C protocol has been in place for more than a hundred years and with little scientific evidence to support it. Over this period technologies have advanced considerably.
Moreover, recent research has demonstrated that cutting this storage/transportation temperature by three degrees would not compromise food safety standards and nutritional value, but would substantially reduce emissions and significantly cut companies’ cold chain costs. Specifically, energy consumption needed to freeze food would be cut by between 10% and 11% and supply chain costs by between 5% and 12%, depending on markets and trades.
Since its formation, Maersk and Cosco Shipping have joined the coalition along with cold chain giants, such as the AJC Group, Lineage, Constellation Cold Logistics, Blue Water Shipping, Seafrigo and Indicold. In addition, the reefer machinery company Daikin, Orbcomm, which develops tracking and monitoring devices for containers, and the container lessor SeaCube Container Leasing, have joined.
Major food processing companies, including Europe’s leading processor of frozen foods, Nomad Foods, and Danish Crown, are also members. It is hoped that the whole cold chain industry will unite behind the coalition, leading to significant cuts in greenhouse gases, and well ahead of the IMO’s 2050 net zero target.
The coalition also believes significant reductions in cold chain costs can be achieved by supporting the initiative.
Thomas Eskesen, a former head of Maersk’s reefer and special cargo division, has been appointed chairman of The Move to -15°C coalition and will drive the campaign.
“Collaboration is essential to our success and so we are delighted to have attracted so many notable new members to our coalition,” he said. “Not only is it great to see our geographic footprint growing, but we are also seeing more members and representatives from across every stage of the frozen food supply chain.”
Eskesen added: “By redefining temperature set points, we stand to make a significant impact in the decarbonisation of global supply chains. But no one company can do this alone. To set us up for success, our focus remains on scaling our membership base and we encourage key players within the frozen food supply chain to reach out and get involved.”
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