Assessing the global market for reefer containers
Reefer container supply, demand, technology and intermodal evolution dissected at
11th Cool Logistics Global Conference
Reefer box shortages are almost certain in 2020 according to some of the leading analysts and operators lining up to take the pulse of the global perishables transport market at the 11th Cool Logistics Global conference and exhibition this September
LONDON, 13.08.2019 – Leading analysts and operators will dissect the future of the reefer market at Cool Logistics Global, the leading conference tackling the latest perishable logistics trends in Valencia 17-19 September.
With orders of new reefer boxes well below the required 140,000 in the pipeline the shortage of reefer boxes hitting the market early next year now seems almost a certainty, according to Thomas Eskesen, Founder of Eskesen Advisory. “New orders currently stand at around 60,000, which is too low,’” Eskesen argues.
By contrast, Martin Dixon of maritime and supply chain research consultancy Drewry argues that the blows might be softened due to existing capacity. A cause for potentially greater worry, he says, is that reefer market growth is forecast below 5% next year due to the uncertain economic climate.
Nevertheless, protein and fresh produce are the main commodities transported by sea and this at least is likely not to change.
Even if reefers shipments are not immune to recession because ‘people have to eat’, Drewry will be sounding a note of caution overall at Cool Logistics Global. Joining Martin Dixon on a special reefer box panel will be Thomas Eskesen, Robert Sappio of SeaCube, Stephané Nielsen of CMA CGM and Anne Sophie Zerlang Karlsen of Maersk Line.
With currently no conventional ships scheduled being retrofitted with scrubbers, according to Drewry, reefer container operators should be in a strong position to at least pass on some of the cost of IMO 2020 compliance to shippers.
The conventional reefer fleet has fallen back to well less than 20% of perishable shipments by sea. In theory the retirement of conventional reefer ships could be postponed – as already now the case – to 35 years and there have been 8 or 9 new reefer builds entering the market that could relieve some of the market pressure. Balanced against this is the concern that older ships consume more fuel. Therefore using low sulphur diesel will hit older ships much harder than the much younger container fleet.
There is a risk for shippers that the new IMO legislation could tip the balance in favour of reefer box operators faster than currently expected.
“If all conventional capacity were to vanish in 2020 175,000 new reefer boxes would be required to fill the gap, ” Mark Bennett, President of Sun Intermodal said.
In theory this should push up demand for more reefer boxes to be deployed or narrow the options for the maritime-based perishable logistics community.
As Robert Mant of Kuehne + Nagel points out, the increasingly stretched schedules of the container carriers offer far less flexibility compared with the conventional reefer ships.
Mant will take part in a separate reefer panel at Cool Logistics Global devoted to banana trades, together with Stefano di Paulo of Great White Fleet, Kevin Bragg ‘fresh out of’ Bonita now with KMB Consulting and Maersk Line.
For obvious reasons no logistics provider would want to put all his or her boxes on one and the same ship. However, with the accelerated demise of conventional shipping the perishable logistics sector and especially their smaller shipper clients may be faced with hard choices this autumn.
Fresh produce is subject to price fluctuations due to a mixture of climatic and retail pressures. This means that several vessel departures a week are critical to secure maximum consumer choice as well as best possible freshness.
As many operators are currently scrambling for reefer boxes, including ironically some of the carriers themselves, K+N is seeing an increasing demand for container match-backs. The company is benefiting from free time allocations in container terminals. This is putting large perishable freight forwarders such as K+N, which now controls 300,000 reefer TEU, in a strong position to wait for return cargo.
There are also other factors that could determine the reefer landscape next year.
There is probably one factor affecting reefer box availability more than any other: the increasing shift of consumer purchasing power away from Europe and the US towards Asia.
This is reflected in new far more diversified container shipping patterns. Reefer trades are still very much dominated by South-North patterns Latin America – US – Europe. However, as trades are shifting to feed Asia markets, the swine flu outbreak in China is leading to a disproportionate increase in number of reefer boxes being diverted to Asia this year.
Whilst some of the reefer box shortage could be alleviated by the deployment of reefer tracking devices, there is an increasing risk of blanked sailings extending to South-North routes, according to Drewry.
One issue with reefer tracking devices is that they are primarily used to monitor the condition of the cargo, rather than enable trade route optimisation. Most reefer containers are still being used for a maximum of 3 journeys a year, with container operators finding even this difficult to achieve.
On the first day of the Cool Logistics conference a whole session will be devoted to comparing different remote reefer monitoring solutions with key technology providers including Emerson, ORBCOMM, Identec, C-Sense and Traxens on stand-by to discuss viable solutions to optimise reefer flows as well as cargo and equipment condition monitoring.
Although the definition of modal choice is still all too often limited to the difference between conventional shipping and reefer containers, ocean carriers continue to develop land-based operations including an intermodal footprint, which is said to be raising increasing concern among logistics operators.
On the third and final day of the conference there will be a whole session devoted to rail-based intermodal operations, focused around the new service between the Ports of Rotterdam and Valencia. Cool Rail is aimed at connecting producers, mainly fruit and vegetables grown in Spain with retailers in Northern Europe. The train is transporting punnets with fruit in one direction under temperature control. On the return leg the train is used to re-position re-usable packaging to the production facilities in Spain. Since it doesn’t require temperature control on the return journey train operator Euro Pool System is working hard to develop north-south frozen cargo, including french fries, to maximise the use of the existing refrigerated transport capacity.
The special Cool Rail panel will feature Mar Chao López from the Port of Valencia, Fred Lessing from Euro Pool System and Anne Saris from the Port of Rotterdam.
The latest programme and speaker line-up can be viewed at www.coollogisticsglobal.com/
Early bird rates are available before 15 August 2019. Delegates can book to attend the full event, 2-day conference only or 1-day workshop only at http://coollogisticsresources.
11th Cool Logistics Global
17-19 September 2019