Cold supply chain may still see the repercussions of the 2015 reefer container drop, as 2018 is mapped as another year of recovery for the sector. According to press reports, equipment availability is scarce, which calls for higher intermodal access to help reopsition reefer containers from places tat may have more than the need and transport them to places where they’re needed.
Opinions are divided as to what is to blame for this shortage. Some say the ocean carrier industry consolidation is responsible, but others point to “the financial fortunes of the industry,” along with “the very unique, individual philosophy of each shipping company to determine wether to own or lease equipment, either reefer or dry,” as said by Robert Sappio, CEO of SeaCube Containers, to JOC Newswire.
So, apparently, its been the different investment philosophies and strategic positioning of the companies that have shaped the playing field. Poor financial results industry-wide have not helped either. 2017 marked the first ‘good year’ since 2010. There was a period in between when earnings were lagging, which forced carriers to make tough decisions about where they were going to invest their scarce CapEx, seldom of it was destined for reefer boxes.
Reefer shipping dip
In the past decade, the combined industry produced over 200,000 TEU/yr of refrigerated equipment. However, in 2015 worldwide international trade of refrigerated perishables dipped when volumes reduced by 2% to an estimated 144.4 million tons. Reefer container shortage has also been a result of the industry shift of refrigerated cargo, migrating from specialized vessels to ‘regular’ container ships, boosting demand for the cold box.
The market improved in 2016 with a growth of nearly 3.5%, and this is expected to do so further by 4% in 2017. In 2016, only 114,000 TEU were produced, followed by 160,000-180,000 TEU in 2017; a sure increase, but still far from the decade-long historical levels. The largest known orders for refrigerated boxes were placed by Hapag-Lloyd, 21,600 TEU/11,400 units, including 1,000 with controlled atmosphere technology and by MOL, 4,200 TEU/2,200 units, including 2,000 with controlled atmosphere technology. China International Marine Containers (CIMC) and Maersk Container Industry (MCI) are the main manufacturers.
Carrier consolidation also played an important role. Huge losses –and the ghost of Hanjin- forced companies to increase the scale of their operations through alliances and mergers & acquisitions. By April 2018 the world fleet will be comprised of only five large consolidated carriers plus MSC and Evergreen, which remain independent. The seven carriers have a combined reefer box fleet of 1,780,000 TEU, while their ships have place for 3,320,000 TEU, nearly 1.9 times the number refrigerated containers.
Baltic Reefers took over from Seatrade as the top conventional reefer ship operator with a capacity share of 12.4%. At the start of 2017, Seatrade Chartering launched Meridian, a reefer-heavy full container service between North Europe and New Zealand, returning via South America West Coast (Peru) and U.S. East Coast. The new operation replaced existing vessels using conventional reefer ships. However, the decision to merge the service with CMA CGM’s PAD in Peru relegated Meridian to a slot charter to the eliminated PAD, forcing Seatrade to restate a conventional reefer service covering this important perishables loading area.
Technology and tracking
Digitalization of the supply chain has allowed for real-time tracking, control and management of the condition of the cargo inside. Maersk Container Industry deserves special credit for setting the bar when it comes to the improvements, as it is incumbent on the other carriers to follow suit or come up with similar solutions of their own, as BCOs will increasingly want them. SeaCube is installing GPS tracking on their boxes and smart technology on leased containers
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