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Reefer equipment reaches surplus point, cool cargo execs say



















Michael Hollmann, special correspondent | Oct 11, 2015 1:03PM EDT












Growth in consumption of fruits, vegetables, meat and fish in emerging and newly industrialized countries should accelerate in the coming years, creating tailwinds for reefer container and specialized reefer operators.












On the other hand, equipment overcapacity is reaching very high levels. Financial returns from transporting perishables are likely to lag due to the fast expansion of reefer plug and equipment capacity by container lines, according to experts at the Cool Logistics Global conference in Brugge, Belgium.











The latest market forecast by one of the leading agriculture and food business lenders, Rabobank of the Netherlands, points to increased growth in fresh food consumption in key import regions in coming years.










According to Rabobank analyst Paul Bosch, annual consumption growth across Africa and the Middle East will rise 4.5 percent each year through to 2020, up from 3.5 percent per annum between 2010 and 2015.












Rabobank expects Asia Pacific growth to increase from 3.5 percent to 4 percent per year and eastern Europe growth to rise from 2 percent to 3 percent during the same period.





“The future looks really bright. There is huge demand, especially for fish and seafood and the growth in market penetration [in less developed countries] is unmatched,” said Bosch.




Ambitious growth targets were outlined by Omar ElNaggar, new markets director at fruit trader SanLucar Fruit. The group is making increased efforts to introduce its products grown and sourced globally into new markets outside Europe and must expand its shipping program.





However, a lack of liner connections from Tunisia is making it difficult for SanLucar to develop its export business to new markets via ocean shipping, said ElNaggar.




By contrast, European exporter Wiskerke Onions has been able to exploit the strong availability of reefer container equipment and low reefer freight rates in Northern Europe to boost its global deliveries. Following years of double-digit growth, its shipping program is forecast to grow to 5,500 40-foot reefer container liftings this year, said managing director Chayenne Wiskerke.




New reefer container routes for the company in 2015 include Europe-Taiwan. The outlook for further growth remains favorable due to limits to domestic production in key importing countries like India and many African countries that suffer from drought and water shortages.



“Water is the problem of the future. They don’t have enough to grow the quantities they need,” Wiskerke said, stressing the “high potential for the reefer sector.” 



Logistics costs for deliveries into large markets like Brazil are extremely low for Dutch onion exports, at only about 0.03 euros per kilogram, based on a typical container freight rate of 800-900 euros per 40-foot reefer container, she said.




As in the dry container segment, reefer freight rates have been under substantial pressure this year, sources in the forwarding and shipping sectors confirmed. 




The downside for shippers is that service levels and schedule integrity have also deteriorated, according to ACJ International transport director Chris Swartz.

“But if you look at rates, something had to give,” he said.






According to Frank Ganse, global head of perishables and reefer logistics at Kuehne + Nagel, overcapacity in the reefer container business looks more severe today than in the past.



“During the past 18 months we are seeing, for the first time, a surplus on reefer equipment side. This was always a major bottleneck. There was always a shortage of equipment during the first quarter, but these times are over,” said Ganse.




Nevertheless, he agreed with Swartz that service quality levels in reefer box transport have been under pressure and noted that high levels of equipment investments by container lines during the past three-and-a-half years have not been matched by investments in training and qualification.





A version of this story originally appeared in IHS Maritime Fairplay, a sister producting of JOC.com within IHS.





http://www.joc.com/international-logistics/cool-cargoes/reefer-equipment-reaches-surplus-point-cool-cargo-execs-say_20151011.html


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