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Dynamar has just issued the latest report in its Shipping Insight series, titled: “DYNAMAR (2013) Reefer Analysis: Market Structure, Conventional, Containers”. Salient details and some interesting findings of the new report are discussed here below. Publication news hooks: - Ocean transport of fresh produce accounts for 2.5% of the worldwide seaborne trade of dry cargoes of all kinds - Brand-operators (fruit traders) are on their way to out from conventional reefer shipping - Reefer container fleet has reached 2.3 million TEU in 2013 - Conventional reefer capacity to halve to 100 million cubic feet and 230 vessels by 2023 - With nearly 900 million cubic feet, reefer container capacity exceeds conventional space four-and-a-half times Reefer trades global context Combined, the seaborne transport of fresh produce in conventional reefer ships and in refrigerated boxes will have reached an estimated 95 million tons in 2013. That volume equals around 14,800 laden conventional reefer ships of 500,000-cu.ft average, or 3.1 million 40’ full High Cube reefer containers. Big numbers indeed, even though the transport of fresh produce accounts for just 2.5% of the worldwide seaborne trade of dry cargoes of all kinds. Thank you, containers The year 2013 had a promising start for the conventional reefer operators: full ships and high rates. Freight rates, expressed in time charter equivalents (TCE) per cu.ft per day, amounted to USD 0.79 per cu.ft for the smaller vessel segment at the start of the year. This further increased to a (non-weighted) average of USD 0.90 for the first half, the highest level since 2008. It was three events that contributed to an increased demand for specialist reefer tonnage enabling the 65%-higher-than-last-year freights: - Sharply decreased capacity caused by abundant scrapping: 230+ ships during the last 5 year years - The quasi absence of newbuilding deliveries: less than 20 vessels in the same period - Container liner operators introducing rate increases for 40’reefer boxes of up to USD 1,500 The latter caused a number of perishables shippers to return to the fewer-than-heretofore-reefer ships. At the same time, the conventional operators were profiting from higher rates for the relatively small volumes reefer boxes they carry as well. What is small? Just over 360 conventional reefer ships have an average capacity for 160 TEU, of which some 40% are provided with reefer plugs. At 6 trips per year and an occupancy of 70%, this would come down to the carriage of approximately 190,000x 40’ high cube reefers per year. Should they have realised an average rate increase of just a third of the proposed amount of USD 1,500 that would yet have brought the conventional operators some USD 96 million of additional revenue for the year. The conventional segment’s box flip side Despite this, the traditional sector has continued losing cargo to the box as the container carriers keep on penetrating into the conventional trades. Even some specialist operators (as the conventional reefer shipping companies like to be referred to) have made a whole or part switch to the container. In 2013, these included: - Isabella Shipping (Uniban) switches its conventional Colombia/Costa Rica-US Gulf service to containers - Great While Fleet (Chiquita), terminates its own Ecuador/Guatemala-Hueneme (container) service between in favour of slots from a CCNI/CSAV/Hamburg Süd box service - Cosiarma (GF Group) puts a stop to the ex Agrexco intra-Mediterranean perishables service operated with two “hybrid” conventional reefer ships These developments have succeeded similar moves in 2012/2011 when: - Great White Fleet (Chiquita) replaced three conventional reefer vessels on the Guayaquil-Port Hueneme (US West Coast) run with cellular tonnage - Geest (Fyffes) substituted a dedicated Central America-Europe conventional reefer ship service with slots on a Maersk Line container service - Dole Ocean Express Cargo (Dole) redelivered five chartered conventional reefer ships plying the Ecuador-Mediterranean route to take slots from full container carrier MSC Generally, the parent companies appear to be happy with their shifts to the reefer box such as Chiquita claiming to have saved USD 12 million a year and Fyffes saying to have achieved significant cost savings and improved efficiencies. Such comments do not bode well for the future of conventional reefer shipping, in particular where it concerns the brand-operators (fruit traders). In addition to the abovementioned, these furthermore include: - Africa Express Line (Compagnie Fuitière) - Ecuadorian Line (Noboa) - Network Shipping (Fresh Delmonte) In all, it is safe to say that these brand-operators are on their way to out from conventional reefer shipping. Flourishing reefer container operators ... if discounting losses? Since Dynamar’s previous REEFER Analysis, the number of box ships operating on the reefer-heavy South-North routes has increased by 46 units to nearly 780 vessels with an average capacity for 4,100 TEU, up from 3,800 TEU. All ships combined on all routes offer space for 443,000 TEU and 62,000 plugs per week. The largest reefer-heavy container ships currently deployed are those operated by Hamburg Süd on the East Coast South America-Far East route: their capacity is 9,800 TEU and they are fitted with (no less than) 2,100 plugs. As such, with a theoretical 5 million cu.ft, at the same time they are world’s largest reefer ships. Vessel size visiting South American East Coast ports will surpass the Ultra Large Container Ship (ULCS) threshold when Hamburg Süd’s first (of three) 10,500 TEU newbuilding, also with 2,100 plugs, enters the trade within less than two years from today. Generally, the Ultra Large Container Ship is operating on the not so reefer-heavy East-West routes. Hence, relative to size, their number of on-board reefer connections has so far been modest, not exceeding 900 plugs average. That said, three units approaching 18,000 TEU just ordered for deployment by CMA CGM will be fitted with 1,400 plugs each. Be that as it may, if the specialist operators manage to keep average (TCE) rates at the 2013 level, they may be looking forward to a period of profitable operations with their fleet reduced to more manageable levels, which is probably more than the average container carrier -lifting more than reefer cargo- can be looking forward to. Boxes rather than plugs Moreover, it should not be forgotten that, rather than the number of containership reefer plugs, it is the size of the reefer box fleet that determines refrigerated carrying capacity. Actually, the number of installed plugs is increasing at a much faster pace than the number of reefer containers. For every 40’ reefer there are nowadays more than 3 plugs available and the number is growing. As a rule of thumb, for every reefer container on board, there will another unit ashore so that the actual availability will in practice stand at seven plugs per 40’reefer. In practical usage, each reefer TEU will make maximum 5 full voyages a year on inter-continental liner services. Despite a 2013 moratorium on new refrigerated boxes from the side of Maersk Line, it is expected that some 200,000 reefer TEU will have been manufactured during the year. Allowing for scrapping, this will have brought the total reefer box fleet to an estimated 2.3 million TEU by the end of 2013. In all, the carrying capacity gap between the conventional fleet and the reefer container continues growing. Dynamar’s new reefer report provides an interesting analysis of the year-on-year development of this phenomenon, showing that, with nearly 900 million cu.ft, reefer container capacity exceeded conventional space by factor 4.5:1 by mid-2013. Conventional reefership developments Compared to the fast developing container segment, the specialist conventional reefer segment has by and large been lagging behind with its ageing fleet and the absence of actual newbuilding activity. Yet, there are developments here too with respect to: - Container capacity: Seatrade’s two 2010/11 newbuildings have a capacity for 525 TEU, for two 2003/04-built units it is even 880 TEU - Design: a consortium called Reefer Intel has presented a design for a new conventional reefer ship-type, based on the Ro/Ro concept. According to the designers, it has 40% lower unit costs and 45% more capacity than a traditional reefer vessel and can load and discharge in only 12 hours. Will such a ship ever come into existence? - Conventional reefership newbuilding: Laskaridis has signed an MoU with a Chinese shipyard for the construction of four conventional reefer ships - a definite order has yet to be placed, however - Reefer containership newbuilding: Dole Fresh Food has ordered three full-reefer capacity 1,500 TEU container ships, fitted with 770 plugs, costing USD 55 each, excluding reefer boxes, for completion by late 2015/early 2016 Dynamar estimates that, at the last five years’ pace and age of scrapping, and assuming no substantial new orders, conventional reefer capacity will come down to around 100 million cu.ft in 10 years’ time. This is less than half the present space and translates into some 320 conventional reefer ships by 2023. The largest operators Seatrade Reefer Chartering (Seatrade Pool) is, unchanged, the largest conventional reefership operator, albeit with a reduced fleet of 65x 485,000 cu.ft average ships by mid-2013, down from 84 units a year ago. The equally unchanged number two is NYKCool, whose fleet has actually increased by three to 23x 598,000 cu.cft average units. In the container segment, measured by reefer plugs on their ships operated on South/North routes, it is, unchanged too, Maersk Line that is the number one with 83,500 plugs and a total reefer container fleet of 510,000 TEU. By sheer numbers, MSC comes second, but in all, the number three Hamburg Süd will be the more consistent reefer operator with 60,000 plugs and 334,000 reefer box TEU. Tables: 1) Top 10 conventional reefership operators Explanatory text: Combined, the world’s ten largest conventional reefer ship operators commercially deploy 257 vessels comprising 115 million cubic feet of reefer space, equalling 55% of the world conventional reefer ship fleet by capacity. The biggest player is Seatrade Reefer Chartering, with a market share of 15% (31.5 million cu.ft.), ahead of NYKCool (13.8 million cu.ft.) and three similarly-sized conventional specialists: Baltic Reefers, Frigoship and GreenSea, each operating between 11 and 12 million cu.ft. The ranking includes four fruit traders (brand operators): Africa Express Line (Companie Fruitière), Geest Line (Fyffes, also operating under its own name) Great White Fleet (Chiquita) and Network Shipping (Fresh Del Monte). Together these four are still responsible for 50 ships of nearly 26 million conventional cu.ft.. Only Africa Express Line and Network Shipping are still 100% loyal to conventional reefer shipping, the others have moved a substantial part of their business to containers. An overview in alphabetical operator order:
Tables: 2) North-South reefer routes operated with reefer-heavy container ships: Explanatory text: Altogether, 108 loops connect the fresh produce rich Southern Hemisphere of Latin America, Southern Africa and Australia/New Zealand with the Far East, the US and/or Europe. Combined, they accommodate 778 ships of 4,100 TEU average and 550 reefer plugs. The aggregated weekly trade capacity is 442,800 TEU and 61,600 reefer plugs. Sixty-two loops connect with Latin America, twenty with Southern Africa and thirty with Australia/New Zealand. This count includes links serving more than one trade area. The following table provides an overview:
Reefer-heavy container ships have either minimum 1,000 plugs or their number of plugs is more than 20% of their TEU capacity. Source: Dynamar |
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