Drewry: Reefer Demand to Remain Container Line Bright Spot
While reefer demand will continue to grow, the impact it will have on the earnings of container lines is uncertain given the current capacity glut. Vegetables, meat and poultry, fish and seafood, bananas, and deciduous fruit are the goods most often shipped in refrigerated containers.
Refrigerated containers will remain one of the few relatively bright spots for struggling ocean carriers, according to a new analysis of the industry by global shipping consultancy Drewry.
Seaborne reefer trade is expected to increase by an average of 2.5 percent a year, reaching 120 million metric tons by 2020. Meanwhile, containers continue to gain share from conventional reefer ships, which now carry only 23 percent of global reefer shipments, Drewry said.
The growth forecast is down from the 3.1 percent average of the last decade. However, combined with a continuing market share from conventional reefer vessels, it’s expected to improve utilization rates for reefer containers, despite current orders for more than 400 container ships with reefer capacity, the report said.
The effect on carrier profitability is difficult to determine, said Kevin Harding, the report’s author. Carriers typically don’t disclose how they apportion fixed costs for individual cargoes or trade lanes, he noted.
Although imbalances in reefer-heavy trades add to carrier costs, reefer cargoes tend to have higher rates than most dry cargoes. Harding said freight rates for refrigerated cargo have sunk along with those of dry cargo.
“Whether any reefer cargoes or individual reefer trades are profitable is debatable, given the competitive freight rate environment that results from the chase for market share among the reefer container ship operators,” Harding told JOC.com.
He said that top container carriers are investing in technology to help shippers track and trace reefer cargoes, and that vessel capacity and equipment are in ample supply, but that low freight rates challenge ocean carriers’ ability to keep funding new investments.
US-to-Asia routes are the highest-volume cargo for reefer containers, followed by North Europe to Asia and the west coast of South America to Europe. The Drewry report said the five highest-volume reefer container cargoes — vegetables, meat and poultry, fish and seafood, bananas, and deciduous fruit — comprise 75 percent of containerized reefer cargo.
The Drewry report, “Reefer Shipping Market Review and Forecast Annual Report 2016/17,” is available for purchase at here.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Drewry
