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Mar. 2015

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Page 6 of 23 THE JOURNAL OF COMMERCE 7A COOL CARGOES G ROWTH IN THE global reefer mar- ket this year will likely outpace the lukewarm performance of the past few years, according to industry analysts. The turnaround started to reveal itself during 2014. A handful of leading box carriers announced sizable investments in vessels and equipment aimed at the reefer market, while specialized carriers, namely Seatrade, made news with declarations of their own. Drewry, a London-based consulting and research firm, estimates that in the 10 years to 2013, global seaborne perish- able reefer trade grew at an annual rate of 3.2 percent, hitting 98 million tons in 2013. Meat and exotic fruit shipments were largely responsible for driving that growth. For the five-year period between 2013 and 2018, Drewry estimates total sea- borne perishable reefer trade will expand an impressive 17 percent. Container carriers continue to com- mand a larger share of the overall market compared to specialized carriers, but with sizable growth prospects ahead, there is sufficient demand to justify ongoing investments from both segments of the reefer carrier sector. Refrigerated capacity on container carriers is expected to rise 22 percent between 2013 and 2018, from 1.6 million 40-foot slots in 2013 to 1.9 million slots in 2018, Drewry says. Sixty-five percent of reefer trade is currently transported on container carriers and that figure is poised to expand further as specialized carriers — and air carriers — watch their market shares erode. Michel Looten, director of maritime at Seabury Group, told attendees at JOC Group's 8th Annual TPM Asia Confer- ence in Shenzhen, China, last October that the air cargo industry lost 5.4 million metric tons of cargo to container carri- ers between 2000 and 2013. Shipments of fashion goods posted the most dramatic air-to-ocean conversion, although perish- able goods were also among the sectors that put more cargo on the water rather than in the air. Even fresh-cut f lowers are moving by ocean in certain trade lanes, Looten said. Shipments of fresh-cut flowers from Colombia and Ecuador now can be trans- ported via container carrier to the United States. The transit time for fresh-cut flower shipments from South America to Europe, however, is still too long to make it a viable option, he told TPM Asia Confer- ence attendees. Despite the healthy growth forecast for the global reefer market, investing in reefer equipment and vessels requires a genuine commitment and deep pockets considering the high costs associated with operating in the sector. A standard 40-foot container costs approximately $5,000 compared with $30,000 for a 40-foot reefer unit. Yet the prospects evidently outweigh the peril for a number of carriers. Last summer, the CMA CGM Danube made its debut in the Asia, Turkey and Black Sea trade. In addition to its many fuel-saving and environmentally friendly attributes, the Danube boasts 1,458 reefer plugs, touted as the most thus far on a ves- sel of its class. CMA CGM acquired more than 10,000 reefer units in 2014. The car- rier expects further growth in its reefer business, spurred by the Panama Canal expansion project. Ha mbu rg Sud is a nother ca r r ier introducing more reefer capacity to the marketplace. In 2013, the carrier took delivery of the Cap San Nicolas and Cap San Marco. The Cap San-class vessels are the largest in the carrier's history and feature 2,100 reefer plugs, another mile- stone in the reefer market. In September, the Cap San Antonio was christened, and Hamburg Sud ordered another "Cap San" vessel. Container and specialized carriers are increasing investments to support growth in demand By Lara L. Sowinski

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