REEFER INDUSTRY NEWSTable 4: Reefer container production by manufacturer (TEU)ManufacturerCIMC GroupMCI-Qingdao***Singamas HoldingsTotal30the WorldCargo Newssubscription packageWorldCargo News brings you worldwide news, features and analysis, updating you onthe latest in containerisation, cargo handling, port and terminal operations andintermodal developments.To ensure you get your personal monthly copy plus ezine and online access send us thisform and we will start your subscription with the very next issue. Our all-in rate foranywhere in the world is just £295 €455 or US$590. Or why not take advantage of ourdiscounted extended subscriptions? Please see www.worldcargonews.com for details.✓2012124,00072,00034,000230,0002013130,00045,00030,000205,000*First half projection. **Annual average calculated for current year (assuming continuous40ft high cube production). *** MCI San Antonio, Chile commenced production in early2015 (no real impact on figures yet). Source: Manufacturers’ own datamarked a change, as all reefer box productionhas been centred on China since2007. Moreover, there has been no significant‘independent’ reefer productionoutside of China in more than a decade.However, MCI made its choice inresponse to the high demand for reefersgenerated annually by growers of fruitsand other perishable produce in SouthAmerica – and to the large equipment2014134,00045,00046,000225,0002015*80,00032,00023,000135,000YES, please enter my subscription to WorldCargo News.Capacity**200,000105,00095,000400,000imbalances that tend to develop thereduring peak seasons.According to MCI, various studies/industry sources have long indicated areal out-of-pocket saving for every reefercontainer repositioned to the west coastof South America, and that more than250,000 empties are currently beingshipped to the area each year, including100,000-plus destined for Chile. It addedNumber of years.............I enclose my cheque or bank draft for £..............US$...............€............... Must be drawn on a UK bank.Please invoice my company - subscription and online will commence on receipt of payment.Please debit my American Express Visa Mastercard (please indicate card and currency used)that “relocation costs are influenced byactual flows, inter-company costs, freightrates and port terminal charges” andthus can be substantial. MCIS is alreadyworking on a factory-to-farm concept,whereby newbuild equipment can beloaded with export produce directly afterbeing collected from the plant by shippinglines. This practice would cut leadtimesfor shippers, in addition to generatingconsiderable savings compared to thebringing in of new (or even used) reefersfrom Asia.NOR shippingMCI further explained that the latterusually requires one to three monthsfor the empty voyage to be completed,with many newly built reefers shippedas NOR (non-operating reefer) fromChina at a significant discount. Added Expiry dateSignature................................................................ Date.....................................................WCN Publishing: The Northbank Coach House, 24 5 Bridge Street, Leatherhead, Surrey KT22 8BL, 8BX, UK.email: subs@wcnpublishing.com fax: +44 1372 370111Please make payments to: WCN Publishing WCN PUBLISHING VAT No: 644 2190 53 www.worldcargonews.comto this disincentive is the likelihood ofcostly handling and potential repairs. Thecompany comments that even if some ofthe new factory production is relocatedout of Chile, this is still likely to generateone fully paid return journey during theinitial months and so provide its owner/operator with a better return than the alternative.MCI therefore concludes that“a variety of attractive propositions arisefrom our ability to deliver reefers fromboth Chile and China… which will enablecustomers to improve the flexibilityof in-fleet reefer planning by providingthem with the capability to meet fluctuatingseasonal demand at short notice.”The total cost of the MCIS project isput at US$200M, with most steel andother raw materials – as well as expertise– being sourced initially from China(where the reefer industry is far more de-Name...........................................................................................................Title..............................................................................................................Company .....................................................................................................Address ......................................................................................................................................................................................................................................................................................Company business .......................................................................................Email (required) .....................................................................................................................................................veloped). The MCIS factory is to produceboth boxes and (Star Cool) machinery,and its capacity is to be built up graduallyover the next year or so. Its eventualoutput could amount to 40,000 containersannually, based on the maximum shiftoperation, which would largely complementthat already existing in Qingdao.Good timingClearly MCI views its timing to begood, as the new factory has opened justwhen reefer demand seems to be pickingup very strongly. Nevertheless, itsstart-up further adds to an already muchexpandedmanufacturing sector, which(as mentioned) now has something of acapacity surplus. The former shortfall of2011 is fast becoming but a memory, asreefer box capacity is forecast to remainhigher than likely production for someyears to come. Nevertheless, some solacehas been provided by a recent fall in thecost of reefer manufacturing, as well asmaterials, which has tended to keep finishedreefer prices at a competitive level.Reefer builders have naturally benefitedfrom the latest decline in energy costs, aswell as from an increasingly cheap stainlesssteel price.This, after falling to a low point earlierin 2013, rallied briefly in the middleof last year and has since gone back intodecline. By the second quarter of 2015,its average was at another low point,amounting to less than US$2,400 pertonne for high-grade (SUS304) material.The corresponding price of Corten Steel,used in the construction of reefer-postsections, was also by that time at a minimumof well below US$500 per tonne.The average price paid per 40ft reefer box(ex-machinery) had, consequently, alsofallen at a near five-year low, of less thanUS$9,500. The outlook is for this priceto stay low, with between US$16,500-17,000 presently paid for a completed40ft reefer (including machinery), dependingon specification.Buyer incentiveThe prospect of continued cheap pricinghas provided yet another incentivefor reefer buyers and, as hinted, attractedsome shipping companies back into thefray during 2015 – alongside the continuedstrong lessor activity. Large purchaseshave already been made in 2015by UASC, Evergreen, OOCL and CMACGM, in addition to the sizeable MaerskLine commitment. However, the lines’top reefer purchaser in 2014, HamburgSüd, is taking more of a back seat thisyear, and – contrary to the wider trend– committing to a proportionally largerpurchase of 20ft reefers than occurred lastyear. It has, conversely, bought very few40ft high cube so far this year.The picture for the leasing industry in2015 is little different to that of the previousyear, as Triton again appears to be themost prominent purchaser of reefers. Itsfirst-half delivery, of almost 20,000 TEU,has come second only to that of Maersk,while the company was the most activebuyer of reefer equipment during 2014.Other leading participants are Textainer,SeaCube and CAI International.Post-takeoverSeaco is another important name and iscurrently in the process of merging withCronos following the formal takeover ofthe latter company by Seaco parent, BohaiLeasing (of China), in January 2015.The two leasing firms have been placedunder a newly created holding company,Global Sea Containers Ltd (Bermuda),which is wholly controlled by Bohai.Once merged, they will control the biggestreefer fleet available for lease, as wellas the largest rental box fleet overall interms of its investment value.The Seaco/Cronos deal has, nevertheless,removed one major – and longstanding– purchaser of reefer equipment forthe sector, in the shape of Cronos, whileother major names, including TAL Internationaland Beacon Intermodal Leasing,have opted for less exposure in 2015.Both companies’ reefer investment is predictedto be down for this year, comparedwith the recent past. However, the deliveriesbeing made to Textainer, SeaCubeand Seaco in 2015 are each expected tobe at least as great (if not higher) thanduring 2014. June 2015
REEFER INDUSTRYReefer monitoring - cost or revenue?Some reefer service providers appearto be focusing on leverage datato lower costs, rather than askingtheir customers to pay an additional feefor remote reefer monitoring services.WorldCargo News has previously reportedthat shippers are not willing topay extra for remote monitoring tomake sure the service they are paying foris actually delivered. Canadian NationalRail (CN) has just announced a C$20Minvestment in the expansion of its coldsupply chain reefer capacity that focuseson service, rather than revenue.The investment includes 200 newdomestic 53ft reefer containers, and 32power packs to move 40ft internationalmarine reefers to and from CN-servedports on its intermodal trains. These arelarge units that can power up to 17 x40ft reefer containers at a time.Truck rivalsJJ Ruest, executive vice-president andchief marketing officer, said the investmentis aimed at winning business fromtrucking. “CN was the first railway tointroduce highway-to-rail conversionof reefer service in trans-border markets.Our high-quality cold supply chainservice has been embraced by the marketplace.We are now adding capacity togrow and help Canada’s food processingindustry gain and maintain access to newdomestic and international markets.”CN’s reefer customers include meatproducts producer Maple Leaf Foodsand frozen food and vegetable giantMcCain Foods. Both companies requirehigh cold chain standards and CN is delivering“robust remote monitoring ofinterior container temperatures”. TheC$20M investment includes a reefermonitoring system from Orbcomm thatwill provide data to a dedicated CNreefer “desk team”.Rather than try and market reefermonitoring services, CN is focusingon its “superior exception managementservices” in the reefer area. The railroadconfirmed that the Orbcomm system isconnected to CN through the cellular,and not a satellite, network. A spokesmansaid the system is “for enhancinginternal monitoring capability” as partof its “protective program” and is workingwell.Solid marketCN’s move confirms what reefer monitorsuppliers have been reporting – thehot market for reefer monitoring technologyright now is driven by carriers,terminals, railroads and trucking companiesthat understand the value of combinedreefer and telemetry data to lowercosts and improve service.Reefer providers are starting to getsmarter about using data to address costs.A terminal operator that handles significantreefer business for Maersk Line saidthe carrier is now looking a lot closer athow and when its containers use power,with a view to running the reefers asmuch as possible during off-peak periods,to lower power costs. Maersk wantsto share in the savings, of course, and thispresents a challenge to the terminal operator.It has long been known that someshippers use the container terminal todraw down the temperature of “hotloaded” frozen or chilled cargo, often usingmore power than is covered by anaverage daily charge. This scenario, saidthe terminal operator, has to also beconsidered by carriers looking to implementusage-based power charging.It was Maersk Line that took the significantstep of installing a GSM-basedreefer monitoring system on its ownreefer fleet, but it does not appear to bepromoting “value-added” monitoringservices for a fee to the same extent asit was last year.In a statement to WorldCargo News,Maersk said it “continues to monitor allreefer cargo as previously. Agreementson enhanced monitoring have been inplace with some customers for sometime”. There have been reports thatMaersk is pulling back from installingremote wireless modems on every singleone of its reefer containers, but theCharging for reefer monitoring servicesis proving more difficult than generatingvalue from reefer data itselfcarrier said modems are installed on “thereefers in scope and are installed on allnewbuild containers”.The market appears to be at the pointwhere carriers, shippers, terminals andother parties in the supply chain are gettingto grips with how to use the datathese systems generate, and there aremany possibilities. In the trucking industry,some refrigerated truck operatorshave found that combining a door sensorwith the monitoring system, so thereefer machine can be shut off wheneverthe door is open, generates enough fuelsavings to pay the monthly fee for monitoringservices, while at the same timemeeting the customers’ requirement fordata.“There is a clear market trend towardsinvestigating possibilities around ‘intelligentreefers’, and several lines are nowembarking on the journey. It is still earlydays, and customer feedback so far hasbeen positive,” added Maersk Line. Scame’s Italian optionItaly-based Scame Parre SpA offers arange of products for reefer containers,including various designs of plugs,sockets and distribution panels, for shipboardand portside applications. It hasnow come up with a remote monitoringsystem, called AMR (AutomatedMeter Reading), which is being trialledin Trieste, Livorno and Montevideo.One of the terminals has already decidedto purchase a large number of AMRunits on the basis of the trial results, saidAndrea Guerreschi, product director forthe OEM sector.The AMR has already been introducedin a number of non-marine applications,including charging stationsfor electric cars, and has won a numberof industry awards for Scame Parra.The WiFi-enabled AMR allows thereefer terminal manager to analyse thenetwork for current and power consumption,and read all local data in realtime. It automatically checks temperatureat pre-set intervals, as well as monitoringkey components, including fuseand earth checks. It is also possible tomonitor operating peaks, to avoid penaltiesdue to low power factors. Statusreports and alarm messages can be sentby email or SMS. The software is scalableto each customer’s requirements.The company is in discussions witha potential customer in South America.June 2015 31
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