The Drewry Shipping Consultants, latest Annual Report indicates that world trade in perishable Reefer cargo is forecast to grow to 215 million tons by 2015 of which 109 million will be seaborne. The bulk of seaborne trade will be carried by container Reefer vessels. That is partially because there is limited, and reducing, specialized reefer fleet capacity.
The report indicates that rationalization has continued over the last year amongst Reefer fleets with some notable companies leaving the specialized sector. Clearly there is a capacity problem for specialized vessels whereas Reefer containers have a real business opportunity if the former cannot bridge the capacity gap.
By mid-2008, the container Reefer fleet boasted more than 4,500 vessels providing 11.4 million teu. Container Reefer capacity is predicted to grow by 69% to 2.5 billion cubic feet by 2013. The fleet of specialized Reefer vessels (greater than 100,000 cubic feet) on the other hand stood at 789 vessels as at mid-2008 - providing 271 million cubic feet of under-deck space. This represents a reduction of 12% (in number of vessels) and 9% (in under-deck Reefer capacity) from its peak in 1999. On current trends, this reduction will continue and it is estimated that the specialized Reefer fleet will drop to just 642 vessels by January 2015.
Commodity demand going bananas
Drewry’s Report also provides a comprehensive breakdown of the world trade of perishable Reefer cargo by commodities. Total cargoes reached 153 million tons in 2007 - having increased from 114 million tons in 2000: a compound annual growth rate (CAGR) of 4.2%. The fastest growing commodity was the exotics group - pineapples, kiwifruit and avocados.
Imports of perishable Reefer commodities into have fallen in relation to the world-wide total – from 45% in 2000 to 42% in 2007. Likewise, imports into have also fallen from 15% of the worldwide total in 2000 to 12% in 2007.
The single most-important commodity - from the perspective of the specialized Reefer owners and operators - is bananas. Bananas can be shipped year-round and this enables Reefer operators to employ vessels on an annual - or even multi-year - basis. In 2007, bananas equated to 22% of total seaborne perishable reefer cargo.
Key economic factors
Oil prices have seen record highs during 2008 while food and commodity prices are soaring. The financial sector is in turmoil as this is being written; exactly what effect this will have on shipping is still unclear. Equally, whether ’s boom lasts or will be stalled by falling demand in the West continues to be debated.
Reefer fleets are not immune from general operating cost factors that are becoming more acute namely the perceived officer shortage and escalating wages, the big increase in the quantum of insurance claims and soaring raw materials costs on the repair market.