Sea freight - Févruary 2018

  • Published on 12/03/2018 - Published by Market News Service / FruiTrop
  • FruiTrop n°255 , Page From 15 to 15
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The first three weeks of February continued where January had left off: despite the bad weather in the Caribbean that disrupted carrier schedules and caused a shortage of reefer equipment, there was no dividend for the reefer – indeed there was little charter market activity in either the large or small segment.

The position for operators had improved by the end of the month, also for weather-related reasons: warmer weather in Ecuador led to a greater abundance of bananas, which caused the exit price to drop sharply. This led to greater demand from charterers, while banana pricing in the EU, Russia and the Eastern Med remained strong. In Europe, shipping schedules were disrupted by the impact of the polar vortex, which impeded port operations and inland logistics on the N Cont as well as causing damage to crops as far south as eastern Spain.

In the isolated terms of fleet deployment, as March began the reefer business looked in decent shape: the supply of capacity was reduced as vessels had either been demolished or sold into China, from where they do not interfere with the traditional reefer trades. Meanwhile on the demand side, the Open List was short and with more tonnage destined for Chile coinciding with greater availability of bananas and the start of the squid and kiwifruit seasons, a mini-peak in the TCE average looked more than possible.

However hidden behind the headline numbers and every day closer to the surface is the realisation that at current liner and COA rates, the mode is unsustainable. Vessels approaching their special survey deadlines will continue to be sold on or demolished as the likelihood of a return on the average US$1m investment required for units to retain Class is ever more problematic. Seatrade in particular has suffered: at the start of the year, once the world’s largest reefer operator saw its position usurped by Baltic Shipping as it cut its coat to suit its cloth. In mid 2016 Seatrade operated in the region of 100 vessels; the figure is now fewer than 40. In contrast, expectations in the small/handysize segment are almost the polar opposite. Although it hasn’t by any means been a spectacular start to 2018, at 70/cbft, the TCE average for the first two months is well above the corresponding 53c/cbft average of 2017. While short and medium term prospects look positive for operators, there is also a realization that more capacity needs to be built to satisfy future demand. The added urgency is that unless more tonnage comes onto the market, certain core trades may be forced to containerize or, in extremis, disappear!

sea freight - europe - large reefers
sea freight - europe - large reefers
sea freight - europe - monthly spot average
sea freight - europe - monthly spot average
sea freight - europe - small reefers
sea freight - europe - small reefers

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