Reefer Fleet in Flux

The reefer fleet reached 2.6 million TEUs in 2015, and this segment of the industry has undergone a fundamental change as a result of low oil prices. 

Dynamar’s most recent reefer analysis report states that fresh produce accounts for 2.7 percent of the world seaborne trade of dry cargoes of all kinds. The seaborne transport of fresh produce in conventional reefer ships and in refrigerated boxes is estimated to have reached 105.5 million tons in 2015. 

The world’s population is expected to grow further to 8.5 billion by 2030, with developing countries absorbing a substantial share of the growth and expected to spend more of their growing income on luxury food prepared from perishables. 

Until 2020, seaborne perishable trade is expected to expand by four or five percent. It was close to five percent in 2014 and only slightly less last year. 

The core trend of the last few years has been the refrigerated box taking over from the conventional reefer ship. This translated in more than half of all conventional reefer vessels scrapped since the turn of the century with barely any ships ordered, along with increasing liner connections operated with reefer heavy container ships. This caused the share of the conventional or specialist reefer segment falling back from 60 percent in 2000 to an estimated 26 percent in 2014.

However, due to the sharp decline in oil prices, many elderly, fuel-guzzling dedicated reefer vessels have become competitive again. As a first consequence, demolition fell back to just five units, of which three in the first half. This constitutes the lowest scrapping activity since 2007 (five as well) and is totally paled by the 65 units super scrapping of 2011, says Dirk Visser, Senior Shipping Consultant and Managing Editor for DynaLiners.

Last year showed an almost complete reversal of what reefer shipping had grown accustomed to: barely any scrapping along with a confirmed orderbook of eleven smaller, up to around 350,000 cft, conventional reefer vessels plus four (perhaps six) full reefer 2,200 TEU container ships. 

“There are more reasons why 2015 may well go down into history as a year of a profound, perhaps decisive change to the worldwide ocean transport of perishables,” says Visser. “It involves a crucial change of course of the world’s dominant conventional reefer operator and fits in entirely with the expected trend towards smaller shipments.”

In July, Antwerp-based ultimately Dutch-owned Seatrade Chartering ordered four 2,200 TEU box ships from the Chinese Zhejian Yangfan yard plus options on four more identical ones. Meanwhile these orders have been upped by two firm and two optional ones, all forming part of Seatrade’s 2020 fleet renewal program. This will ultimately, by the end of this decade, add 20 such container vessels to its current fleet, currently consisting of 86 conventional units of which the largest 54 are ranging between 450,000 and 650,000 cft.

“As opposed to the reefer-heavy ships generally deployed by container liner operators in the southern hemisphere trades, the new Seatrade vessels will be full-reefer-capacity units,” says Visser. “This means that they will carry a full load (by deadweight) of filled, almost exclusively 40-foot high-cube refrigerated containers connected to 670 to 770 plugs.”
 
Other important specifications include the new ships’ up to 20 knots speeds and maximum draft of 9.2 meters. This will enable them to continue calling the generally smaller specialized reefer ports near produce-growing regions as presently served with smaller specialist reefer vessels. “Hence, Seatrade can operate its full reefer box ships according to the tested conventional scheduling,” he says.

“They are as fast and as shallow as Seatrade Chartering’s largest conventional ships, but with a three times as large a capacity expressed in pallets. The new ships’ up to 14,400-pallets average capacity compare to the 4,000 to 5,500 under deck pallet space for the company’s 450,000 to 650,000 cft specialist vessels.  

“And here’s what clearly stands to happen: Seatrade’s 2020 fleet will ultimately replace most if not all of its largest conventional vessels, therewith heralding (the start of) a factual shift of the world’s largest conventional reefer operator to the container segment.”

Freezer Ships

Something not ever expected to become the subject of containerization is the freezer segment. This concerns smaller, but highly specialized, dedicated reefer ships designed for direct high-seas vessel-to-vessel transhipment and carriage of fish or meat. 

“Some analysts expect a hugely growing demand for fish and seafood in particular including what they call an unmatched market penetration for same in less developed countries,” says Visser.

The current orderbook comprises eleven such vessels, of which four were ordered for Seatrade’ GreenSea Pool, while it took an option on four more similar 8,000-dwt/350,000 cft units. 

“With all of the above in mind, any conventional reefer fleet forecast tends to become a risky issue,” says Visser. “Taking the pace of scrapping and the rising scrapping age in mind and assuming no substantial newbuilding, there should theoretically be a fleet of a combined capacity of some 120 million cft left by 2025, down 41 percent from today. This would equal 340 vessels at the current 325,000 cft average. 

“However, if Seatrade’s shift to the box is adopted by other operators, scrapping will accelerate, and the numbers will look different in ten years from now.”