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Dynamar: Specialised reefer carriers likely to struggle with IMO 2020

Dynamar: Specialised reefer carriers likely to struggle with IMO 2020

Dynamar’s latest reefer market analysis indicates that conventional reefer carriers’ woes are set to continue in 2020 whilst the containerisation of major cargoes moves ahead.

Supply side dynamics set the tone throughout 2019, it noted, and the focus on the fleets will likely remain well into 2020 following the entry into force of the IMO 2020 fuel regulations and the expected surge in scrapping.

In particular, cost implications are the immediate worries for carriers as a result of the IMO 2020 regulations coming into force.

The report’s authors noted: “There are limits to the costs carriers can pass onto their customers and so we may see some, especially on the conventional side, exit the market. Containerships are expected to manage better although only time will tell.”

The latest figures show that the international perishables trade reached a record 163m tonnes in 2018 with 119m tonnes carried by sea.

Yet the report noted that trade tensions continue to cause concern amongst shippers and carriers, both containerised and conventional, and the slowing output in key economies has led to an erratic end to the year in terms of trade flows.

With demand for fresh produce remaining resolute, the focus is on the fleets, the fortunes and the futures of the conventional and containerised carriers.

Major market movers, including global fruit traders Chiquita and Del Monte, continue to transfer their trade to boxes, pointed out Dynamar.

Specialised conventional carriers, including 2019’s market leaders Baltic Shipping and Seatrade, are being forced to focus on an increasingly tight number of trades and are likely to fall victim the coming volatility on the back of IMO 2020 according to the report.

The conventional fleet’s high average age, combined with fuel hungry engines, has primed the conventional sector for a surge in scrapping due to rates remaining low and higher costs on the horizon.

On the whole, container carriers are expected to fare better as greater fuel efficiency and the capture of conventional cargoes enable them to withstand the increased fuel costs.

A further fall in the market share of the conventional carriers is on the cards, noted Dynamar.