On Sept. 9, Seatrade’s Baltic Klipper departed Kitanihon Shipyard in Hachinohe, Japan, on its maiden voyage and headed south to New Zealand’s Port of Tauranga, picking up its first load, 5,500 pallets of kiwifruit for transport to Belgium.
The vessel’s initial sailing illustrated both a rarity in the specialized reefer sector and some of the more common aspects of the trade.
The rarity was that a new breakbulk reefer vessel came out of a shipyard — the specialized fleet has been shrinking for years as significantly more vessels are scrapped than built. The vessel, with a length of 165 meters, a deadweight of about 15,000 metric tons and a top speed of 22.5 knots, took nine months to build at the northern Japan shipyard.
The Baltic Klipper is significantly more energy-efficient than previously built vessels and uses a new refrigerant system considered more environmentally friendly than older systems. Over the next six months, two sister vessels will join the Baltic Klipper in Seatrade’s global reefer pool. Seatrade also has a fourth ship on order.
“We are forecasting that the fleet will continue to shrink,” said Susan Oatway, an analyst at Drewry Shipping Consultants. “Other than the four for Seatrade, I don’t think there are any on the orderbooks anywhere.”
According to a new report by Drewry, the number of breakbulk reefers larger than 100,000 cubic feet fell to 727 vessels this summer, down 17 percent in less than 10 years. About 40 vessels were scrapped in each of the last two years, and the industry is on target to scrap about 50 reefer ships this year.
The scrapping has increased for two reasons: The value of scrap metal has been high, and the older vessels were not fuel-efficient, a rising economic burden with the rapid rise in fuel prices.
But even as the number of specialized reefers has declined, global reefer trade has increased. An increasing amount of the trade is shipped in refrigerated containers.
“Change is evident,” said Bill Duggan, vice president of refrigerated services, North America, at Maersk Line. “Reefer vessels are a deteriorating market, and we see a continual shift to container service.”
Container lines currently carry about 55 percent of the oceangoing reefer trade compared with 45 percent for specialized vessels, but Maersk estimates the gap will increase to 70-30 within the next several years. “We’re going to see a few replacement vessels in that fleet, but I don’t see any big building program.”
Drewry’s report sees a total reefer fleet size of between 458 and 635 vessels by the beginning of 2015.
No matter the makeup of the oceangoing vessel fleet, Drewry said the overall global perishables market would continue to grow in the next few years, following patterns set earlier this decade. The report said the total global perishables reefer trade stood at 113 million metric tons in 2000, with 57 million metric tons carried by oceangoing vessels. In 2009, the reefer trade worldwide totaled 156 million metric tons with 77 million metric tons seaborne.
According to Drewry, the highest percentage growth during the 2000-09 period was in the exotic fruit category, with the largest volume growth recorded by various meats. “Just as notable is the change in import patterns with volumes into western Europe, although considerable, declining while eastern European imports have grown from 9 percent to 14 percent of overall trade,” the report found.
The specialized reefer industry has operated through vessel pools for years, and this year a new pool was established specifically for midsize vessels.
“Seatrade and the other carriers have vessels of different sizes for different markets, said Howard Posner, general manager at Seatrade USA. “We started the Hamburg Reefer pool for what we call the Handysize vessels,” which range from 150,000 cubic feet to 350,000 cubic feet.
Posner said ships of that size are considered too small for the banana trade, so they tend to focus on frozen cargoes. “We have about 120 vessels in the Hamburg Reefer pool now,” Posner said.
Drewry’s Oatway said the arrangement can help the owners through better economies of scale; for example, backhaul cargo operations and more efficient triangulation routing to reduce the time and distance vessels are kept empty.
“This size of vessel is very difficult to operate profitably as running costs are not so different to the larger vessel size, but, obviously, earnings are on a far-smaller cubic space,” which means operating costs per cubic foot are higher, he said.
“The intention of creating a pool is that there is common marketing,” Posner said. “The whole idea is that the industry is not competing for each load.”
That size vessel got a big boost when the Russian government said it would again allow imports of U.S. poultry.
Duggan said that while cargo of some markets, such as poultry shipments to Russia, will remain mainly carried by reefer vessels, other reefer cargo markets are being converted. “The big kahuna is the banana trade,” he said. “It’s such a significant amount whether you’re talking about conventional or container.”
And it’s within that big “kahuna” that Duggan said container carriers were able to make inroads. As consumers in more parts of the world want bananas, container lines are better able to serve the remote markets, he said. “If you look at the banana business into the U.S., there is not a great transit issue, but to a place like the Middle East, it can be a challenge,” Duggan said.
A conventional reefer would drop a vessel load of bananas in some spot, and then they would have to be transshipped to more remote locations.
Not only can container shipments be headed into more directions, but new technology also comes into play. “Maersk pioneered the Star Care unit that increased the amount of time bananas will remain fresh from 30 days up to 50 days,” Duggan said. He said the new membrane technology in place gives 20 more days of shelf life and allows bananas to reach just about every market in the world.
Another advantage to fruit and vegetable quality when shipping by container is the more manageable size of the load itself, according to Juergen Pump, senior vice president of Hamburg Sud North America.
“When you ship by container, you receive cargo in better condition with less damage,” Pump said. “With breakbulk vessels you have to palletize the cargo, lift it onto the vessel and stow it in the holds. And on the dock when it is unloaded, it sits in the sun and the heat until it gets moved again.”
Specialized reefer vessels offer considerable benefits to shippers, including the ability to perform required cold treatments on cargo during shipment, Posner said. “We’re there to provide door-to-door service on the shipper’s schedule with a very fast transit time. We aren’t stopping at different points, so our vessels get there faster.
“There are certain trades where we can’t compete on price, and there are markets where we can provide the shippers with an advantage in their marketplace,” he said. “There is so much competition in the market for fruits and vegetables based on seasonality. A shipper’s ability to get to market a day or two in advance or a week in advance of their competitors can make all the difference in the price they receive. Those commodities are all negotiated based on daily pricing. If we can get a load of melons out of Guatemala to the market before Honduran melons are in the market, there is a real value to that.”
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