By Phil Hastings

Global reefer trade could be heading for a capacity crunch next year and it may even turn into a perfect storm.

That was the warning voiced by speakers at the recent Cool Logistics 09 Conference held in Hamburg, Germany. They said an anticipated steadily increasing demand for space would begin to outstrip the availability of both container and conventional equipment due to a lack of investment by cash-strapped shipping lines.

"For next year, we see what we would label a perfect storm - but nobody knows it yet," said Thomas Eskesen, global head of reefer management for Maersk Line.

Expanding on that point, he said market fundamentals suggested world reefer trade volumes next year would rebound to reach about the same level seen in 2008. "That might even be conservative," he added.

Eskesen said there could also be less container equipment available to carry that cargo. Only around 30,000 new ocean reefer containers would enter the global fleet this year, compared with a typical annual figure of about 110,000 units. At the same time, with the average life-span of a reefer container being 13-15 years, a lot of boxes would be decommissioned this year and next.
"Overall, it is not unrealistic to expect that there will be fewer reefer containers available next year than this."

To back up that point, he cited Maersk's own experience. "This year has actually been the best year we have had in terms of reefer container volumes but I can say that for the first time, we will not be investing in reefer equipment next year. We simply don't have the cash."
Asked by Cargonews Asia which reefer trades were the most likely to be affected by equipment shortages next year - and specifically whether any Asian markets would suffer - Eskesen said that was not clear yet.

"The lines are still deciding how to allocate their vessels and containers next year," he said.
Eskesen confirmed, though, that some Asian reefer trades could be affected. "For example, there are currently strong volumes of refrigerated poultry and other meat being shipped from Brazil to China and Japan and those vessels are already sailing close to full. That trade is being balanced by Asian exports to South America but the length of the route would mean that any increase in sailing frequencies to try and accommodate more reefer traffic out of South America would require a large number of ships to be deployed."

Eskesen also highlighted another shipping industry development which he believed would further exacerbate reefer container shortages - slower vessel speeds and longer transit times.
He explained that shipping lines had already implemented slow steaming, reducing vessel speeds from, say, 24 knots down to 19-20 knots, to cut fuel costs. Now, some lines were looking at super slow steaming, taking the speed down to about 13 knots, a move which in the case of a large container ship, could save around US$80,000 a day in fuel consumption.

"That is important for reefer trades because it means that in many corridors extra ships will be put into service, which in turn means container equipment will be tied up for one week more," said Eskesen.

"If you add all those factors together, we will have around 5-10 percent less reefer container equipment available next year."

Claus Peter Ellemann-Jensen, vice-president of reefer trade for CMA CGM, said his company had similar views regarding sector trends next year.

"We expect overall reefer volumes for 2010 to be back up to the levels of 2008 and we see equipment supply being completely flat, if not experiencing a decrease. Added to that, the slow steaming of ships will decrease the turnaround of equipment," he agreed.

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