‘M&A frenzy’ in reefer trade will continue

Analysts say 74% of reefer cargo moves in containers.    A continuing “merger and acquisition frenzy” in the refrigerated shipping business over the next several years is forecast by the Netherlands-based consultant and publisher Dynamar.
   In its just-released “2014 Reefer Analysis: Market Structures, Conventional, Containers” report, Dynamar notes that for the first time ever, the annual seaborne transport of fresh produce exceeded 100 million tons in a year.
   It estimates that in 2014, 101.1 million tons of refrigerated cargo was shipped, equal to some 15,700 laden conventional reefer ships of 500,000 cubic feet, on average, or 3.4 million 40-foot full high cube reefer containers. That’s or about 2.7 percent of the worldwide seaborne trade of dry cargoes of all kinds.
   “In all likelihood, various ingredients of the season’s dishes you will have been digesting during the last few festive days will have traveled in a reefer ship or container before reaching the table,” says Dirk Visser, senior shipping consultant at Dynamar and managing editor of its DynaLiners newsletter.
   There were several big M&A deals in the refrigerated cargo business this year including:

• Chiquita Brands International’s decision in October to be acquired by a Brazilian joint venture of the fruit juice producer Cutrale and the investment firm Safra for $681 million. The deal was reached months after Chiquita had originally said it would merge with the Dublin-headquartered banana importer Fyffes.
• St. Petersburg-based Baltic Reefers’ acquisition in September of NYKCool AB from NYK Reefers Ltd. Now known as Cool Carriers, the company is continuing to operate independently from Baltic Reefers.
• The merger of CSAV and Hapag-Lloyd to create the fourth-largest container shipping company that includes “24 reefer-heavy South-North services, using a joint reefer box fleet of some 115,000 TEUs — a lot, but still at some distance from nearest contender CMA CGM, with its 36 relevant services and 170,000 refrigerated TEUs (soon to grow to 185,000 TEUs),” it said. Dynamar noted that CSAV’s breakbulk reefer business is outside of the merger with Hapag-Lloyd. “With the chartered-in vessels operated by CSAV Panama, this offers seasonal reefer cargo services during the November/April Chilean fruit season to North Europe and the East and West Coasts of the U.S.,” it added.

   Dynamar said the decision of Fyffes and Chiquita not to merge “ended a potential going-together-experiment of two parties so far having pursued different shipping strategies,” with Chiquita and its Great White Fleet using containers, while Fyffes — with its Fyffes Atlantic Shipping and 50-percent-owned Geest Line — largely uses breakbulk reefer ships.
   But Dynamar says it expects the use of containers to ship refrigerated cargo to continue to grow.
   Today it estimates the size of the reefer container fleet has reached 2.45 million TEUs in 2014. It said the 2014 share of containerized shipping of fresh products is approaching 74 percent.
   A bit more than 26 percent, or less than 27 million tons, is left for the conventional segment this year, it said. Dynamar forecasts conventional reefer capacity is to decline by more than 60 percent to just around 140 vessels by 2025.
   “The ocean transport of perishables may be a relatively small shipping activity, [but] the overall reefer supply chain is an extensive one, growing every year. More than any other cargo, fresh products require constant and highly specialized care. This involves numerous specialists on both sides of the trade, all applying the most advanced techniques to ensure that the product arrives ‘fresh’ to the consumer, time and again,” Dynamar notes.
   It said “the reefer supply chain requires profound knowledge of the cargo, the type of product and its characteristics. And obviously, whether it should be transported frozen, chilled or cooled, with the exact temperature differing by item. Without the required awareness and constant attention, mistakes or delays quickly occur, which may be fatal considering the perishable nature of the cargo.”