Fresh produce accounts for 4.0% of the world seaborne trade of dry cargoes of all kinds: 2017 reefer box production remains low at some 160,000 TEU

Reefer shipping and the rest

Statistics are always running behind, one more than the other. It has therefore appeared only recently that worldwide international trade of refrigerated perishables went through a dip in 2015. That year, volumes reduced by 2% to an estimated 144.4 million tons. As matters are, things were repaired again in 2016 with a growth of nearly 3.5% on-year, expected to improve further by 4.0% in 2017.

Trade is one thing, seaborne transport of fresh produce another. The latter, in both conventional reefer ships and refrigerated boxes, is estimated to have reached 110 million tons last year. One-hundred-ten million tons equals some 9,100 laden conventional reefer ships of 500,000-cft average, or 3.71 million full 40’ High Cube reefer containers. The share of the overall maritime transport of fresh produce of the world seaborne trade of dry cargoes of all kinds is estimated at just below 4%.

Consolidation, where not

Huge losses forced carriers, among which the largest reefer container operators, to increase the scale of their operations: CSAV and Hapag-Lloyd – CCNI and Hamburg Süd – China Shipping and Coscon – APL and CMA CGM – Hapag-Lloyd and UASC – Hamburg Süd and Maersk Line – and soon to happen: “K” Line, MOL, NYK as ONE – OOCL and Cosco Shipping Line. Inter alia, Hanjin has disappeared.

Come April, the container ship fleets of five consolidated container carriers plus staunch loners MSC and Evergreen will range between 1.1 million TEU and 4.3 million TEU. These seven carrier have a combined reefer box fleet of 1,780,000 TEU, while their ships have place for 3,320,000 TEU, nearly 1.9 times the number refrigerated containers.

Top 10 conventional reefership operators

Rank

Operator

Operated fleet

 

Ships

Cft

Share

1

Baltic Reefers/Cool

41

24,206,500

12.4%

2

Seatrade Reefer Pool

42

22,530,200

11.5%

3

GreenSea Pool

37

11,055,600

5.6%

4

Frigoship

28

9,468,000

4.8%

5

Star Reefers

13

7,469,000

3.8%

6

Network Shipping

15

6,560,500

3.3%

7

Africa Express Line

8

4,470,400

2.3%

8

Maestro Shipping

6

4,078,600

2.1%

9

Dole Ocean Cargo

7

3,667,600

1.9%

10

Boyang

14

3,225,600

1.6%

Top-10

211

96,732,000

49.4%

Other operators

394

99,130,200

50.6%

Grand Total 

605

195,862,200

100%

Share Top-10

35%

49%

At the end of 2017, the world’s ten largest conventional reefer ship operators combined commercially deployed 211 vessels, comprising 97.6 million cft of reefer space, equalling 49% of the world conventional reefer ship fleet capacity. Baltic Reefers including its separately operating subsidiary Cool Carriers is, for the first time, the biggest player with a capacity share of 12.4% (24.2 million cu.ft.).

After having been the almost untouched numero uno during many years, the Seatrade Reefer Pool now comes second with 11.5%/22.5 million TEU, ahead of the GreenSea Pool, to which Seatrade also contributes ships. There are six perishables traders serving their own transport needs. Part of the top ten are Africa Express Line (Compagnie Fruitière), Dole Ocean Cargo Express (Dole) and Network Shipping (Del Monte). Next tier operators are Cosiarma (GF Group), De Nadai Shipping (Unifrutti) and Great White Fleet (Chiquita). Combined, these six are responsible for a capacity of 22.7 million cft. On the above table is an overview in alphabetical order.

Note: Capacity has been allocated to the carrier actually responsible for the long-term commercial operation of the ships

Conventional interests in logistics

Compared to containers, the conventional reefer front enjoyed a relatively peaceful again in 2017, in other words: no new mergers or takeovers of substance. If any trend can be recognized, it is a growing interest of carriers in logistics.

  • Eimskip takes shares in two reefer logistics operators: Belgian Mareco 80% and Dutch Extraco 90%, respectively
  • Italian fruit traders GF Group, owner of conventional carrier Cosiarma, and Glenalta Food merge as Orsero. Orsero successively acquires reefer logistics companies Hnos Fernández López (Spain), and Frutital Firenze and Galandi (Italy)
  • Samskip of Rotterdam buys Nor Lines. Norwegian regulators had refused same to Samskip’s major competitor Eimskip
  • The European Commission cleares the takeover of (Irish) Fyffes by Sumitomo Corp of Japan, the country consuming nearly one-third of the worldwide bananas harvest
  • Toei Reefer Line (Japan) is facing a management buyout by five leading executives having formed Ocean Co, bidding around USD 30 million
  • By end of the year, Belgian Greenyard (market value USD 1 billion) handling two million tons of fresh food worldwide, expresses its interest in taking over 2013 Dole Food Company (USD 2.5 billion). ReeferTrends thinks that Dole and Ireland’s Total Produce would be a better fit.

How about the revenues?

It is beyond this review to explain the working and meaning of the complex Time Charter Equivalent (TCE). Calculated per 30 days per cubic feet (cft) capacity, it is what revenues for conventional reefer ships are being expressed in and usually split per first and second half of the year.

For conventional operators of the larger 450,000 cft capacity vessel benchmark, 2017 was nothing less but dramatic. At USD 0.35, the average TCE in this segment was the worst of the last ten years. Pundits are afraid to see this turning worse in 2018 and beyond.

How different it was for the smaller 270,000 cft benchmark! First half: penultimate worst over the last 10 years at 58 dollar cents – second half: with 94 dollar cents the highest 10-year average ever. The resulting full year average here was a more regular 0.76 dollar cents.

The smaller ships typically are the fish and meat carriers; the larger units predominantly transport fruits, bananas in particular. Fish is often transhipped at sea directly from the trawler into the reefer. This makes the smaller conventional reefer ship less vulnerable for competition from the box indeed.

Containerised revenues

Revenues for containerised shipment of perishables are articulated in a considerably simpler gross freight per TEU.

Altogether, from a TCE perspective, 2017 was, at best, a lacklustre year for the conventional segment. Contrarily, the fresh container sector didn’t do bad at all, last year, with rates hovering between some USD 2,900 and USD 3,100 per 40’ reefer box. In 2016, at times rate fell to a disastrous USD 700: what a difference a year makes…

The sharply improved rates are assumed to be the effect of carrier consolidation, with the enlarged shipping companies managing a better control of rates. This is helped by a rather tight reefer container availability.

Containers, the boxes

Some 130,000 TEU reefer containers were built until October 2017. This will work out at around the same 160,000 TEU the year earlier, equal to 84,000 units and far below the volumes of earlier years. CIMC (China International Marine Containers) and MCI (Maersk Container Industry) are the main manufacturers.

The largest (known) orders on refrigerated boxes were placed by Hapag-Lloyd, 21,600 TEU/11,400 units, including 1,000 with controlled atmosphere technology (CA) and by MOL, 4,200 TEU/2,200 units, including 2,000 with CA techniques.

Operating container ships ain’t easy

At the start of 2017, Seatrade Chartering launched Meridian, a reefer-heavy full container service between North Europe and New Zealand, returning via South America West Coast (Peru) and US East Coast. It was to deploy six of the carrier’s 2,300 TEU/650-770 plug-Colour Class newbuildings. The new operation replaced existing ones using conventional reefer ships.

Containers were not new to Seatrade, neither were the trades routes served, while the initial four newbuildings operating Meridian were to be the first of a fleet renewal programme to comprise twenty such units by 2020. Yet, things have clearly not developed as intended.

In July, Seatrade merged Meridian with the PAD service of partners CMA CGM and Marfret. Various other changes occurred and by the end of the year, Seatrade had been relegated to a slot charterer on PAD. As PAD no longer serves Peru, Seatrade has restated a conventional reefer service covering this important perishables loading area.

Three of Seatrade’s ships have been chartered out to CMA CGM, the fourth to Gold Star Line and the two units being built have still to be delivered (one may even have been cancelled). No further ships have not -yet- been ordered.

Seatrade has now experienced what means to operate on the edge of container and conventional. However capable you are, it just ain’t easy: will it pay off?

That said, Seatrade’s subsidiary StreamLines has expanded its North Europe-Caribbean full container service now calling ports in/on the French Antilles, Curaçao/Aruba, Central America East Coast and via US Gulf back to Europe, deploying five reefer-heavy box ships.

Other reefer operators, traders in particular continue their switch from conventional to containers using reefer-heavy ships:

  • Chiquita’s Great White Fleet: West Coast South America-US West Coast – 2x 2,500 TEU – every 10 days – Guayaquil, Puerto Quetzal, Puerto Chiapas, Hueneme
  • Having ordered 500x High Cubes with controlled atmosphere and monitoring technology (CA) fuels the suggestion that AEL (Compagnie Fruitère) is close to making the switch to box ships

A reasonable, though intriguing conventional orderbook

Upon last year’s new years’ eve, the conventional orderbook counted thirteen reeferships of all sizes with a total deadweight capacity of 126,000 tons, 9,700-dwt average and all or delivery in 2018/19. Included are four 300,000-cft ships for Seatrade.

Some very intriguing conventional reefer ship orders have been placed:

  • The largest to be ever built; 30% largest than the current ones afloat! Two 22,300-dwt/880,000 cft, 560 TEU – by non-operating owner Nissen Kaiun Co, to be built by Shikoku Dockyard – delivery late 2018/early 2019
  • By Network Shipping, the in-house carrier of Fresh Delmonte: two 20,000-dwt/800,000-cft, 600 TEU – to be built by Guangzhou Wenchong Shipyard – delivery late 2019/early 2020

Would this usher an era of fewer but larger conventional reefers vessels, paralleling fewer but larger box ships?

Scrapping continuous unabated

According to (former) Lloyd’s Register of Ships, twenty-four conventional reefer ships of all sizes built between 1970 and 2001 were scrapped in 2017, three of which were total loss. It is the highest number since 2012, when no less than seventy units fell victim of the torch.

With an average of nearly 30 years and an altogether limited newbuilding activity, the conventional reefer ship fleet is doomed to decline further and steadily. Dynamar expects the fleet to number some 400 ships with a combined reefer capacity of 132 million cubic feet.

No reefer report without reefer ports or reefer-heavy ships

Dynamar’s Reefer Analysis highlights well over 120 reefer ports in more than 40 countries, detailing a wealth of data such as main perishables, volumes handled, annual reefer ship calls, port throughputs, terminal plugs, draught, and so on.

And then there is the reefer-heavy containership phenomenon; an extensive overview of reefer container heavy shipping services on the most relevant South/North reefer routes, increasing every year!

Source: Dynamar

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