Each year reefer box operators are successfully gaining a higher share of the market, according to the Dynamar (2012) Reefer Analysis: ‘Market Structure, Conventional, Containers’, especially in dedicated container services between specific supply and demand areas. Undoubtedly this has partially been achieved by reefer operators offering lower, sometimes much lower, rates than the conventional operators had in the past or were able to, suggests the report.
As a result, the appetite to invest in the specialist conventional reefer sector was removed, resulting in a shrinking fleet. Dynamar states that in the July 2011/2012 period, 94 conventional reefer ships (including dedicated fish carriers) were withdrawn, removing capacity of nearly 36m cu ft (including lost on-deck container space. Scrapping accelerated during the second half of 2012.
In the same period, the container segment increased by26 ships, after scrapping, with the addition of 99,600 reefer plugs, theoretically capable of accommodating more than 199,000 reefer teu, and by more than 230,000 teu, predominantly 40ft high cube reefer containers.
Not every container ship in the world is competing against the conventional segment, states the report. It is principally those operating on the perishables-heavy North-South routes connecting Latin America, Southern Africa and Australasia with Europe, North America and the Far East. With their combined 3.6m teu capacity, the 730 box ships deployed on these routes make up 17% of the world fleet. In terms of their 390,000 reefer plugs it is 22.5%, which clearly demonstrates their reefer-heavy character.
At the present pace of scrapping and assuming no substantial new orders, by 2020 the number of conventional reefer ships will have reduced to only some 370 units, less than 60% of the present complement.
The report asks the rhetorical questions of whether the end of the conventional reefer segment is in sight? That remains to be seen, it answers, as the relevant operators appear to have been caught by a refreshing optimism!
Seatrade, the world’s largest operator controlling a 20% capacity share, expects the conventional reefer trade to be close to reaching a new equilibrium in terms of supply and demand, predicting healthy 2013 peak season rates helped by this year’s abundant scrapping.
News has emerged of Star Reefers Pool placing an order for three, 300,000 cu ft. conventional reefer ships with considerable container space; it also plans to upgrade four existing vessels with side-loading systems
This new found optimism may have been fuelled by the announcements that Maersk Line, CMA CGM and MSC will increase 40ft reefer box rates by US$1,500 across the board, effective 1 January; other container carriers are following suit as they all adhere to the argument that the current costs and required investments are not covered by freight revenues.
The reports suggests that the general opinion among refrigerated produce shippers, worried about losing business because of the increases, seems to be that container operators think that they can cash in now after having successfully marginalised the conventional sector.