As the world spins into the second quarter of 2018, one could be left with the impression that little is wrong with reefer shipping. The first three months of 2018 were characterized by optimum deployment of the reefer fleet in liner schedules or seasonal business: when spot business did materialize, there were more vessels fixed at lumpsum values and TC rates certainly well above those achieved in the period 12 months ago.
As ever, the explanation for this apparent change of fortune lies on both sides of the supply and demand equation. Historically, Chilean table grape and stonefruit volumes underpin demand for reefer capacity between mid December and end March; despite aggressive, price-based competition from the carriers, the reefer mode has been able to maintain a leading presence in the Chile-US trade until, and frequently beyond the Marketing Order deadline.
This year was no exception – indeed the reefer performed more strongly this season than last: the services operated by Cool Carriers and Global Reefers carried 76% of early Chilean fruit to the US, up from a 72% share in 2016/17. In the early peak of the stonefruit and table grape seasons (i.e. to the end of week 13), the operators carried 447K pallets out of the total 591K shipped to the US east and west coasts. This compares to 442K out of the corresponding 611K pallets shipped in 2016/17 - higher therefore in both relative and absolute terms.
While the specialized reefer remains the modal choice of Chilean shippers, operators undeniably benefitted from the shortage of reefer equipment suffered by the lines, the origins of which stretched back to early February, when bad weather on both sides of the Atlantic wrecked liner schedules, leading to the displacement of reefer container stocks. But it wasn’t just Chile. The bad weather in the Caribbean that so disrupted shipping, also caused widespread damage to banana production in Central America. Meanwhile the cold spell in the US and Europe, coupled with a delay to the early berries and relative shortage of substitutable northern and southern hemisphere fruit led to a spike in interest in bananas. The combination led to an unusually buoyant banana market. Ecuador was initially unable to take full advantage; however warmer weather west of the Andes in mid February led to greater availability of bananas. The exit price fell partly because of this increased volume and partly because there was an accumulation of fruit as a result of insufficient equipment in place to meet the sudden rise in demand. This, in turn, led to a series of spot banana charters. With the large vessels either fully occupied, chartered out, sold into the Far East or demolishing, it was the small and handysize units that were able to take advantage.
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