SPECIALIZED CARRIERS CATCH MERGER WAVE \ ACTION MIRRORS CONTAINER SHIPPING TREND

SPECIALIZED CARRIERS CATCH MERGER WAVE \ ACTION MIRRORS CONTAINER SHIPPING TREND

A combination of bad weather in Latin America, economic collapse in the Far East and growing competition from container lines with large fleets of refrigerated boxes is prompting a wave of consolidation among specialized refrigerated carriers.

''Consolidation of ownership is now beginning to occur in the conventional reefer market,'' mirroring the wave of mergers in the container shipping business, London-based Drewry Shipping Consultants said in a report titled ''World Reefer Market Prospects.''The consolidation trend was ''most spectacularly illustrated'' in the merger of Cool Carriers, a Stockholm-based carrier, and Universal Reefers to form the world's largest reefer operator, the report said.

A REAL COOL CARRIER

Earlier, Cool Carriers combined its handy-sized reefer ships with those of Norwegian-owned Eastwind Transport.

This past January, Norway's Leif Hoegh Group, a major investor in Cool Carriers, joined its reefer business with that of South African carrier Safmarine, to form Unicool Ltd. in Stockholm.

Also this year, the London-based Vestey Group announced it will sell Blue Star Line, its refrigerated box business, to P&O Nedlloyd.

The trend continues this spring. On April 22, specialized Norwegian reefer carrier Swan Reefers said it would buy Irgens Larsen, another Norwegian carrier.

''I would not be surprised if we see more'' such combinations, said Thorliev Benjaminsen, a ship broker with AS Klaveness Chartering in Oslo.

What's driving these mergers is overcapacity in the refrigerated shipping business in general, particularly in the traditional reefer fleet, which consists of specialized ships outfitted with refrigerated hulls.

GROWING COMPETITION

These carriers are facing growing competition from container vessels that carry 20-foot or 40-foot boxes that are chilled individually with plug-in refrigeration units. With these individually chilled boxes, refrigerated cargo can be carried alongside general, non-chilled containerized cargo.

In recent years, the box carriers have been steadily increasing their shares of the estimated market of 40 million metric tons a year for oceanborne refrigerated transport. That market, which is growing at 2.5 percent to 3 percent a year, will reach 55 million metric tons by 2005, according to Drewry Shipping Consultants.

GRABBING MARKET

The box carriers, whose share of the reefer market has grown at an annual rate of 2 percent to 4 percent in the past few years, are likely to increase their efforts to grab a portion of this trade, several reefer executives said.

''I see a growing tendency for the container lines, which have poor economies in their own markets, to look into the reefer trades,'' said Mr. Benjaminsen of AS Klaveness Chartering.

To some extent, the two types of reefer carrier are chasing different types of refrigerated cargoes.

The box carriers tend to focus more on frozen cargoes, while traditional reefer ships are more likely to carry chilled produce and meats, said Peter Mortensen, research analyst for Lauritzen Reefers A/S of Copenhagen, a major player in the refrigerated ship business.

''Containers are taking over more and more in frozen cargoes, and eventually may control the global picture,'' Mr. Mortensen said.

Box carriers also tend to seek out high-value, low-volume cargoes such as shrimp, while traditional reefer carriers are more likely to move low value, high-volume seasonal cargoes such as citrus fruit from the southern hemisphere.

''But refrigerated box carriers are penetrating even those (low-value, high-volume) markets,'' said Svante Hellberg, spokesman for Cool Carriers in Stockholm. ''We face significant competition from refrigerated box carriers, primarily Maersk Lines.''

The growing competition from box carriers is reflected in the figures on investments in new box-carrying ships versus traditional refrigerated hulls.

INCREASE IN THE FLEET

According to a Containerisation International market analysis, the fleet of refrigerated-box carrying ships increased 9 percent between 1996 and 1997, compared to a 5 percent capacity drop in the traditional reefer fleet.

Still, despite the steady loss of market share to container carriers, ''conventional traffic will continue to account for more than 50 percent of the total trade,'' Drewry said in its March 1998 ''World Reefer Ports'' briefing report.

Both types of reefer carriers are facing special problems this year due to El Nino-related changes in weather patterns and the collapse of economies in East Asia.

The banana crop, for example - the most important single commodity carried on reefer ships - was hard hit by El Nino. In Ecuador, the banana crop fell by 18 percent in the first quarter of this year compared to last year. The Chilean banana crop also has been damaged by floods related to El Nino.

The economic collapse in Asia also has cut the trade by depressing demand for fresh fruits and vegetables, Mr. Benjaminsen said.