Healthy Orderbook for Reefers

The maritime transport of fresh produce grew faster than the overall world seaborne trade of dry cargoes of all kinds in 2016, a market share of 4.3 percent. 

Shipping analyst Dynamar has issued its latest reefer analysis highlighting that the seaborne transport of fresh produce in both conventional reefer ships and refrigerated boxes reached an estimated 108.5 million tons in 2016. This equals some 16,900 laden conventional reefer ships of 500,000-cubic feet average, or 3.65 million filled 40-foot High Cube reefer containers. 

The conventional reefer sector went through difficult years, but compared to containers it seems to have arrived into calmer waters when it comes to mergers and takeovers, says Dynamar. 

There were just three:
•    Eimskip acquired Nor Lines - including one conventional reefer ship 
•    Samskip took full control of Silver Green - seven small conventional reefers (fish) 
•    Fruit trader GF Group is to merge with ditto Glenata Food - no ships involved

If considering rates, however, the conventional reefer seas were extremely rough, again. Annual average 2016 Time Charter Equivalents for the 270,000 cft benchmark were the lowest since 2010; at 39 dollar cents for 450,000 cft vessels, they were the worst ever in 10 years. 

With the oil price still at a historically low level combined with low scrap prices, demolition of conventional reefer ships dropped to a very low level. Only those vessels unfit for further trading, usually over thirty years old, were scrapped. This was five average 423,000 cft-units in 2015, increasing to ten last year. If the present trend to higher oil prices persists, scrapping may well pick up further again in 2017, says Dynamar.

By the end of 2016, the reefer ship-orderbook counted a relatively healthy sixteen units, with their capacities ranging between 120,000 and 650,000 cft. Most, if not all of the smaller, up to 350,000 cft, units will be for the fisheries trades, including four on order by Seatrade. 

Just four vessels are of the largest sizes and assumed all to be for Star Reefer. The Anglo-Norwegian company itself has so far confirmed only two of them of which the first was delivered early in 2017.

“With the average age rising and an overall restricted newbuilding activity, the conventional reefer ship fleet continues its decline, although now slowed somewhat by the current orderbook and the four ships delivered in 2016. Yet, by 2025, ships built before 1995 will reach the average scrapping age of 30, altogether causing the fleet to fall by around 35 percent to some 400 units.”
 
Running against the trends of previous years, at an estimated 135,000 TEU, the 2016 production of reefer boxes halved compared to 2015. It may be considered a reflection of the signalled weakening reefer trade environment with the single advantage of a lack of equipment shortage, says Dynamar.  

Just as the “Dynamar 2016 REEFER Analysis” went to press, Seatrade Chartering announced the January 2017 launch of a new, 10-day frequency, reefer-heavy full container service, styled Meridian. It is the first operation in which it will deploy its purpose-built newbuildings. The first four of an initial order for six have meanwhile been delivered, with the remaining two following shortly. Chartered units will initially complement the planned eight-ship Meridian flotilla. 

All six 27,200-dwt ships have a nominal capacity of 2,250 TEU and are fitted with 670 to 770 (the last two) reefer plugs. This means that at a full load of 40-foot High Cube reefer containers filled to their maximum allowed payload, the four 670-plug vessels could still accommodate an additional 120 TEUs of dry cargo. The maximum gross weight of a full load of laden 40-foot High Cubes alone would exceed the deadweight capacity of the two ships with 770 installed plugs.

Meridian FDD (Fast, Direct, Dedicated) will connect 11 ports spread over New Zealand, Peru, U.S., Europe and the South Pacific. The rotation will be as follows: Nelson, Napier, Tauranga, Callao, Paita, Philadelphia, Zeebrugge, Dover, Rotterdam, Dunkirk, Radicatel, before returning via the Panama Canal, Papeete and Noumea back to Nelson. Representing an 80 day-roundtrip, it is quite a world trip, albeit not around.

“Meridian definitely represents a major happening: the world’s largest conventional reefer ship operator goes containers,” says Dynamar. “Ultimately, and as part of the company’s 2020 fleet renewal program, the number of similar container ships should grow to 20, i.e. another 14 to go, therewith replacing most of its current largest conventional vessels.” 

However, container ships are not new to Seatrade. At present it operates eight box ships of between 1,100 and 2,500 TEUs with 250 up to 500 plugs in two different services: Agadir (Morocco)-St Petersburg and Caribbean-North Europe, the latter operated by subsidiary StreamLines.    

In the last quarter of 2016, 872 reefer heavy ships accepting containers operated 133 different South-North services originating in Latin America, Africa or Australasia. This represented a weekly capacity of 488,000 TEU along with the onboard availability of 71,000 reefer plugs. Apart from some smaller differences, the overall operated capacity, in terms of slots and plugs, remained largely unchanged in comparison to 2015. It is the first time in years this has happened, says Dynamar. 

The (theoretical) annualized refrigerated capacity of all these reefer heavy South-North container services can be calculated at a rounded 9.0 billion cft. This compares to the 1.3 billion cft capacity of the current conventional fleet. That is, containers exceed conventional capacity nearly seven-fold.

Seatrade Reefer Chartering continues to be the largest conventional reefership operator with an, albeit reduced fleet of 56 527,500 cft average ships. Baltic Reefer including its subsidiary Cool Carriers comes second with 42 units/590,000 cft average, followed by Lavinia-controlled Frigoship Chartering: 33units/351,000 cft.   

In the container segment, measured by reefer plugs on ships operated on the South/North routes, Maersk Line is, again, the number one with 115,000 plugs. MSC comes second with 86,000 devices and Hamburg Süd third with 79,000 connections. Combined, Maersk Line and its future subsidiary Hamburg Süd operate 195,000 reefer plugs on the South/North routes, equal to a relevant share of 36 percent.

Dynamar’s Reefer Analysis highlights over 120 reefer ports in more than 40 countries, detailing data such as main perishables and volumes handled, annual reefer ship calls, total port throughput, number of terminal plugs, draught and more.