Karsten Kunibert Krüger-Kopiske - Die deutsche Kühlschifffahrt - German Reefer Shipping

–Citrus

Citrus cargoes are seasonal and are typically shipped during the months when there is less overall refrigerated cargo (the “off-peak” reefer season) when rates are generally lower. This gave the specialised reefer operators an advantage which could not always be matched by the containership operators who were more focused on year-round rates and services

–Deciduous

While these cargoes — apples, pears and grapes — are typically shipped during the “peak” reefer season, volumes are substantial and often needed fast loadings with many specialised reefer vessels almost back-to-back — none more so perhaps than in the case of the high-volume, short-season Chilean grape crop.

–Exotics

Melons and pineapples in particular are often grown in similar areas to the banana-exporting regions — and can be shipped by the same exporters. Thus, it benefitted the specialised reefer operators for the same reasons as the banana business did — even though this cargo was more-seasonal.

–Hard-Frozen

Cargoes such as meat, dairy and fish have always focused heavily on container shipments — where less temperature sensitivity meant that decades ago (when refrigerated containers were less-sophisticated) they were still able to carry hard-frozen cargoes without concern. The notable exception is with shipments of fish. Although the containership industry carries a substantial quantity of hard-frozen (and chilled) fish/seafood products, the specialised reefer ships are still heavily involved in these trades. The ability to load fish from trawlers directly into the holds of awaiting specialised reefer ships gives the specialised reefer industry a significant advantage in many areas of the world.

Overall, it is clear that many refrigerated cargoes still find the specialised reefer mode of transportation an attractive proposition. Whether it be because of year-round cargo flows, off-season pricing, huge volumes of cargo in a relatively short period of time or the ease to load the cargoes, specialised reefers have been able to retain a sizeable volume of business — with a market share around 15 %.

Of course, the containership industry has heavily targeted the refrigerated cargo base. Despite its more-difficult carriage requirements and its higher carriage costs, it is significantly more higher paying than dry cargo and, overall, gives the containership operators a greater net return. In this regard, the containership industry has been very successful — increasing its market share from around 50 % at the turn of the century to around 85 % today.

However, there are a number of major specialised reefer operators still in existence. These operators include:

–GreenSea (Belgium)

–ART/Frigoship (Germany)

–Baltic Cool (Russia / Sweden)

–Seatrade (Belgium)

–Star Reefers (UK)

–FCC (Japan)

These major six specialised reefer operators control over 170 specialised reefer vessels between them — in excess of one-third of the total specialised reefer fleet. These Companies have a wealth of knowledge and experience in operating refrigerated ships & refrigerated cargo services and are highly respected within the industry. Between them, they provide time charters as well as liner services and are involved in the carriage of all the major commodity groups.

Additionally, specialised reefer ships are owned/operated by fishing companies (typically Far East-based), fruit companies (including De Nadai, Del Monte and Dole) and smaller European-based operators such as Eimskip (Iceland), Maestro (Denmark) and Silver Sea (Norway).

However, the average age of this 496-specialised reefer fleet is a remarkable 28 years. Clearly, many vessels have a somewhat lower age than this but, none the less, with an average age of 28 years, the fleet is certainly an aged one. As vessels age, their running costs increase — specifically every five years when a dry dock and special survey is required to be undertaken. As mentioned previously, it is at this time that owners focus their attention on whether it is prudent to spend the significant sums of money involved or whether it is time to recycle the vessel.

The future of the specialised reefer industry is difficult to predict. There are some who have already predicted — for many years — that the industry will disappear. Yet, 20 years after its peak, it is still around and still carrying large volumes of cargo.

The seaborne trade of perishable products increases annually — driven by increases in wealth/GDP and increases in global population. Global events can temporarily alter the supply/demand, but typically any adverse effects in one area (whether it be weather-related or economically related) are off-set by positive effects elsewhere in the world. Historically, we have seen any short-term disruption soon corrected and the trend of seaborne perishable cargo growth continue.

It is for this reason alone that a market share reduction for the specialised reefer industry to around 15 % is not as drastic as it may seem. In terms of perishable reefer cargo carried, the specialised reefer industry has seen its cargo tonnage reduce from around 30 million tonnes ten years ago to around 20 million tonnes today. Still a significant reduction, but still a significant amount of perishable reefer cargo carried. This is a sufficient amount of cargo to ensure a relatively healthy utilisation — and, in normal times, an acceptable profit — for this aged industry.

Notwithstanding all of the above, it is obvious that the specialised reefer industry has reduced in terms of both number of ships and cargo carried/market share — and that this trend will continue. The most important question is, therefore, the speed of the ongoing decline.

Recently introduced legislation requiring reduced sulphur limits of 0.5 % in fuel oil similarly resulted in yet more forecasts of the end of the line for the specialised reefer industry. It was considered that the price margins for this low-sulphur fuel would be too great for the industry to bear given its relatively small ships and, therefore, relatively large fixed costs — in terms of “per cargo tonne carried”. Further, the inability of such an aged fleet to cover costs of retro fitting “scrubbers” to reduce sulphur levels from cheaper, higher-sulphur fuels added to this forecast of imminent demise. However, it transpired that the cost differential between the two-types of fuel significantly reduced — both prior to and after the global COVID 19 phenomenon — whereby the cost of fuel is no-longer currently considered to be a factor effecting the longevity of the specialised reefer fleet.

COVID 19 itself has also added to the longevity of the specialised reefer fleet. It soon became obvious that the refrigerated containers required to load onto the containership services were in short supply — being held at ports/terminals/premises around the world which were themselves heavily restricted in operation. These restrictions also affected the containerships — with services withdrawn, suspended, or, at the very least, delayed. Conversely, the specialised reefer fleet once again demonstrated its uniqueness by being able to move quickly to load/discharge ports and more easily operate during the difficult COVID 19 times. That is not to say that the specialised reefer services were able to operate completely unaffected, but that the effect on this segment of the industry was, seemingly, somewhat less than its modal competitor.

Once COVID 19 is managed, attention will again turn to the specialised reefer mode and, inevitably, to its future and its longevity.

Some specialised reefer operators have already taken measures to ensure they are equipped to deal with the future. Seatrade has a relatively large number of its own liner services and, further has diversified into operating reefer container vessels. ART/Frigoship has a dominant position within certain fish trades where it controls trawlers and fishing operations in a form of an integrated service structure. FCC — a Japanese-based company — has strong ties within Japanese markets in a similar way to that of Baltic Cool in its home market of Russia.