Drewry: Annual Reefer Shipping Market Review and Forecast 2009

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

28 Nov 2008

Reefer shipping continues to evolve.  Initially it was largely a pure port-to-port “tramp” operation but it has subsequently developed into a far more complicated - and professional - business involving, for example, inland transportation, terminal operations and liner services. However, despite this evolution, it remains a niche business. In fact, consolidation continues to take place within the industry, resulting in the business today being at its most concentrated in terms of a reduced number of owner/operators controlling a reducing number of vessels.
The business of reefer shipping typically involves the transportation of perishable refrigerated cargoes on south-north routes in vessels with a high degree of technical specification, offering rapid transit times and, where required, pre-determined schedules.  Specialised reefer operators have a “hands-on” approach to shipping, which has not traditionally been seen with the container operators.  However, many of these container operators are today heavily advertising their high level of care and expertise in an attempt to “neutralise” the perceived “customer care” advantage enjoyed by the specialised reefer operators.
The word “logistics” remains one that is interpreted in numerous different ways by the various owners and operators within the specialised - and containerised - reefer industry.  For some time, practically all owners and operators have acknowledged the importance of logistics, but not all have embraced it in their culture.
The worldwide trade of perishable reefer commodities has increased from 114.6 million tonnes in 2000 to 152.7 million tonnes in 2007 – and is forecast to increase further to 215.1 million tonnes in 2015. 
The specialised reefer fleet comprises of 789 vessels greater than 100,000 cubic feet (of under-deck capacity).  This fleet has been steadily reducing form its peak in 1999 and, with negligible new building orders (currently there are just 16 vessels to be delivered between 2009 and 2014) and on-going (and increasing) scrapping levels, this fleet reduction will inevitably continue in the foreseeable future. 
Specialised reefer time charter rates have increased over the last five or six years and currently stand at the highest levels ever experienced.  However, with increasing demand (for refrigerated cargo capacity) and decreasing availability (of specialised reefer tonnage) these rates are unlikely to fall in the foreseeable future.  The degree of increase will depend on a number of factors - not least of which is the current economic down turn - and, as always, the competition from the reefer container operators.
However, while it is clear that individual trade lanes will be affected by specific, targeted competition from the reefer container operators - who are clearly not building their larger reefer capacity vessels merely for show - globally the position is likely to be somewhat different.  The 12 month time charter market for larger specialised reefer vessels (of 450,000 cubic feet and above) is forecast to remain strong.  These high quality specialised reefer vessels are in demand - a demand that is likely to increase - and, as such, their rates are forecast to increase.  While the annual spot market is more volatile, this too, on a global basis, is forecast to experience an increase in rates – albeit for a reducing cargo base in the years ahead.

Source: Drewry