COLD SPELL OVERWHELMS REEFER FLEET AS WEARY OWNERS TURN TO SCRAPPING

COLD SPELL OVERWHELMS REEFER FLEET AS WEARY OWNERS TURN TO SCRAPPING

The world's refrigerated fleet of big ships will grow only 1 percent this year and decrease 4 percent next year, possibly the first decrease since 1985, experts said.

After seven years of hefty net increases in the world reefer fleet, which grew 6 percent in 1981 and 8 percent in 1992, Bo Natt och Dag, president of Cool Carriers, said he expects the small growth this year and the decline next year. Cool Carriers is the world's largest operator of refrigerated ships.Large numbers of big refrigerated ships - 250,000 cubic feet capacity or more - are heading for the scrap yard as their owners finally quit searching for cargo.

Many more ships are likely to be sent to the breakers next year if the 1994 peak season for the shipment of chilled produce flops again. Peak season runs

from March through June.

The refrigerated shipping trades are suffering one of the worst periods in nearly a decade with a combination of lower demand for imported fruit in the main consumer countries and new ship capacity depressing freight rates.

Contracts under negotiation for the 1994 peak season are being fixed at current spot market rates that are some 20 percent to 25 percent below contract rates for the same period in 1993. This year's busiest period was well below last year.

The difficult conditions experienced this year have encouraged a good deal of scrapping since June, Mr. Natt och Dag said.

So far this year, 35 reefer ships of 12.5 million cubic feet have been sold for scrap, and Cool Carriers said it expects the full year's total to reach 40 to 42 vessels totaling about 15 million cubic feet.

The volume scrapped will not be far off the amount of new ship tonnage expected to be delivered this year, estimated by Cool Carriers at about 18 million cubic feet.

This would be the first contraction in the reefer fleet since 1985 and a sign that the supply and demand position is starting to move back into balance, the Cool Carriers president said.

And neither he nor other reefer shipping experts are expecting a rapid recovery in the market.

Espen Harr, a reefer market analyst with shipowner Torvald Klaveness Group in Oslo, Norway, said Tuesday that the market was unlikely to pick up for a couple of years. He forecasts another wave of scrapping next spring after owners of older vessels again fail to find employment during the high season.

Lars Gunnar Larsson, managing director of Scanreefer Chartering in Stockholm, also is bracing for more bad years. But with freight rates too low to justify ordering new ships, building is slowing to more acceptable levels. The world order book for reefer vessels has shrunk to half the level reached in 1990.

In addition to the large number of new ships delivered in recent years, the reefer trades have been hit by lower demand. Contrary to earlier opinion, the international produce trade has discovered that demand for fresh fruit is not recession-proof, Mr. Natt och Dag said.

Meanwhile, last year's bumper fruit crop in Europe, which depressed demand for imports from the Southern Hemisphere, continues to affect the trade. Apple supplies remain high.

New European Community restrictions on banana imports from certain countries - imposed to protect growers in former British and French colonies - also have disrupted the market. Some of the big international banana companies have surplus ship tonnage because of the regulations that went into effect July 1.

Russian freezer ships, while elderly and unsophisticated, continue to undermine the market by charging rock-bottom freight rates for deep frozen produce. Operators are mostly pinning their hopes on an accelerated scrapping program to eliminate surplus reefer ship tonnage and bring the market back into balance.