Transportation & Logistics Analysis

Reefer: Is it the new El Dorado of maritime container transport?

June 17 2019

The controlled temperature shipping of goods remains a niche in the global market of ISO containers. Nevertheless, it is experiencing steady and strong growth. This sector now accounts for between 15% and 18% of the total volume of containers on the ocean routes between the West and the East.

CMA CGM has recently announced the creation of a division dedicated to Reefer Pharma within their company’s reefer division, so as to enable them to respond more efficiently to the needs of this specialised market. This initiative can be seen as a very good indicator of the growing importance of maritime transport of controlled temperature goods.

1/ The success factors

Changes in terms of fleets and technology

  • The 10 largest maritime carriers in the world all operate a significantly large fleet of reefer containers.
  • Refrigerated bulk carrier ships have all but disappeared.
  • Next generation container vessels have more reefer points incorporated into their original designs.
  • Container terminals are investing in additional reefer points.
  • The 40 foot high-cube reefer format is now becoming the industry standard, and this harmonisation allows for simplification and also opens the way towards the expansion of consolidation.
  • Technological progress has allowed for greatly improved temperature recorders to come onto the market, these also include humidity control features.
  • The use of identical containers for positive or negative temperatures that are easy to connect to a generator during road haulage is also an element that facilitates the expansion of reefer containers.

Market changes

  • The demand for reefer container transport in the wine and spirits sector is growing. Originally confined to luxury products, controlled temperature transport is now also being used for mid-range goods.
  • The expansion of the reefer and its improved performances allows the market to open up to new goods such as dairy produce, pastry and bakery products and frozen precooked dishes.
  • The markets that traditionally made use of reefers such as meat or frozen fish and seafood are currently expanding.
  • Ten years ago, the transport of International Maritime Dangerous Goods (IMDG) in reefers was prohibited (with the exception of HL) but now most of the main carriers accept them.
  • The substitution of modes of transport of goods from air to maritime is rapidly growing in the controlled temperature sector.

The regulatory context

The regulatory framework in the pharmaceutical sector is favourable to the expansion of the reefer market because of the growing needs in terms of product integrity. This is particularly relevant in the European market since the publication in 2013 of new guidelines on good distribution practice of medicinal products for human use (see chapter 9).

2/ Existing barriers

  • The high cost of materials: the containers are made from welded aluminium and cost between 6 and 8 times more than an equivalent dry container.
  • Maintenance costs and repairs are also high, particularly because this type of material must be systematically inspected before each voyage.
  • The supply of empty reefer containers is more expensive than traditional containers because the movement in the reefer market is less consistent.
  • Seasonal peaks in activity that require important resources in a short space of time (fruit juices, apples, crabs).
  • Reefer points in container terminals remain limited despite the sums invested for them.
  • The use of reefer containers to carry normal goods to avoid running empty, known as RAD (reefer as dry), is still quite an unusual occurrence.
  • Due to the high direct costs, shipping companies rarely offer reduced rates despite strong competition.
  • The expansion of 40 foot high-cube reefers that are replacing the traditional 20 and 40 foot reefer containers is a barrier for certain customers.
  • The quayside operations management remains complicated and expensive.
  • Shipping companies could be forced to face the costs of potentially large risk claims.
  • The use of reefers is ideally adapted to direct services, but it is relatively unsuitable for transshipment.

3/ The advantages of Upply

Thanks to the November 2018 launch of its price comparison tool, Upply has brought transparency to the transport market. In the maritime sector of our services we have now integrated the reefer container market into our Smartscan and Benchmark tools (on subscription these are available for free up to October 2019).

In 3 clicks you will be able to access the price dispersion on the reefer market for the port pair of your choice. As for dry cargo you can add pre-carriage and/or on-carriage to the price.

There is nothing stopping you from trying us out! This new function comes highly recommended by Captain Upply!

This is also a perfect opportunity for our early adopters to fine tune their benchmark by defining the quantity of containers and by using the “Hazardous goods” function. Feel free to also test our history per lane or per corridor function with its rate of confidence included, and to benchmark the mass price by using the Smartscan tool.

photo: @Maersk Line

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Expert in Ocean shipping for 25 years, Jerome puts all his knowledge of the industry to contribution for Upply. Ship captain at heart, he has written the English-French Lexicon of Containerized Shipping (Paris: CELSE, 2001).
See all its articles