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Dynamar is proud to present its eleventh consecutive, annual, extensive specialist report:

REEFER Analysis 2021 – Market Structure, Conventional, Containers

For a taste of what is to come in the report, please see the below introduction.


After an eventful 2020, came a hectic 2021. The year 2020 started with the advent of the coronavirus. In January 2020, China came to realise that something was completely wrong and much of the country went into lockdown. Life in the world’s manufacturing plant of anything and everything came to a standstill and so did production, exports and all manner of economic activity. Container carriers were in disarray, ships went into lay-up and the already low rates fell even lower, reaching rock bottom in May. Whilst carriers were struggling, the only bright spot was the collapse of the oil price. This occurred at the same time as the introduction of IMO 2020. This required the transfer to using low-sulphur fuels or scrubbers and was expected to push up operating costs throughout the shipping market. The price drop probably saved the life of many old ships, which would otherwise have gone to the breakers shortly after. Through 2020, only 200,000 TEU and six conventional reefers were broken up, many fewer than expected.

In the second half of that year, much of the world came back to life again. Without being able to spend their money on services such as holidays, luxury diners or other trips, people started making life at home comfortable. Instead of buying services, people started spending their money on goods. And which country is good in making stuff? Exactly, China. Approaching the end of the year, this caused demand for shipping services to rise steeply. Consequently, rates started to go up considerably during October-November to levels not seen in a number of years. But with rates traditionally higher in the second half of the year than in the first half, this could be seen as a temporary phenomenon. Not so, this time.

During the traditional low season of January-April 2021, demand remained high. The laid-up containership fleet, which had reached a low at the end of 2020, shrank even further. With trade in full swing, and little capacity to spare, the situation became even more tense when the 23,900 TEU “Ever Given” blocked the Suez Canal for six days. With ships arriving late in Europe and returning late in Asia, there was no longer extra capacity to compensate for the missed sailings. Meanwhile, along the US West Coast, it became increasingly difficult for ports to offload arriving ships in time and remove the boxes from their terminals, so their anchorages started filling up with ships waiting.

With demand continuing to rise and vessels being caught up in congestion, the already high freight rates began to rise even higher. On average, rates became three to four times above the levels of one year previous. Shippers started paying huge extra sums just to guarantee their cargoes a place onboard one of the vessels. But even that was not enough, some carriers started favouring spot rates over the lower contract rates and refused to meet their obligations to the shippers. As a result, some shippers and wholesalers decided to charter their own ships. Also, box carriers decided to jump into trades that were new for them, and even some new carriers emerged. Unfortunately, the extra small ships deployed on main trades made the situation worse. Competing for handling capacity, these actually contributed to congestion and, with up to 12% of the fleet queueing and not available for trade, the carrying capacity of the containership fleet dropped considerably. Yet, for the conventional reefer operators this was a very favourable situation, as some reefer cargoes that otherwise would have been shipped by container came their side once more.

As demand levels and freight rates remained high in combination with rampant congestion, carriers started eagerly searching for more ships. For non-operating owners it was party time, with rates of up to USD 200,000 per day paid for small box vessels. Therefore, some carriers, such as CMA CGM and MSC, decided it was better to buy than to charter at such massively inflated prices. Due to the increased demand, some aging ships were even sold for prices higher than what they were built for. The carriers that did not join this rat race were still affected, however, as owners sold their chartered ships even before their charter terms came to their end and without even giving them the chance to renew.

Whilst much of this took place outside the typical reefer routes, the impact was felt across the perishables trades. It became increasingly difficult to arrange the capacity to keep services running or only for inflated prices. As an example, Great White Fleet, which exited the conventional reefer sector and completely turned to containers a few years ago, decided to charter three of the biggest conventional reefers from Cool Carriers/Baltic Reefers for the Caribbean-Europe trade, as the containerships they operated became more than four times as expensive.

Also the conventional reefer operators benefited. Whilst time charter equivalents reached extreme lows in 2020 and one operator even cast doubt on its continued existence, in 2021, their fortunes were reversed. Cargoes that would otherwise have gone into containers now ended up in their ships. Consequently, only few ships were scrapped during the first half of 2021, some of which because they were approaching their five-year survey and it would have been too costly to keep them in operation.

For conventional reefer operators, the joy is temporary, however. Their ships continue to grow older, while orderbooks are razor thin. Therefore, in the second half of 2021, demolition started picking up again, with twelve units scrapped in a period of just four months. Moreover, with new environmental regulations coming into force in 2023 requiring operators to reduce their fuel consumption, quite a number of ships will become uneconomical to operate. With regulations becoming even stricter in 2026 and the costs of upgrading too high, many ships are likely to be sold off for scrap by that time.

In the meantime, however, it is party time in the liner industry. The top-12 carriers managed to bring in a net profit of more than USD 75 billion during the first nine months of 2021 alone, an absolute record. For the entire year, this sum is likely to surpass USD 100 billion. Much of this money has been allocated to newbuildings. For the conventional reefer operators, for which little financial data are available, profits are likely to be less exorbitant, but they probably have a good year as well.

What 2022 will bring and how long the boom will last is anybody’s guess. As long as a big part of the fleet is absorbed by congestion, the current situation will continue. A positive for the container operators is that they are likely to renew contracts at higher rates than before, so that income is guaranteed even when the spot prices eventually go down. A major ordering boom in 2021, during which the containership operators spent much of their income on new tonnage, is not likely to bring any relief until at least 2023, or even before 2024. These are interesting times…

This publication builds upon the analysis of the previous years. The study comprises three parts: two separate sections on the different conventional and container reefer trades, based on an extensive write up and one section analysing the structure of the market.

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