Why Are Shipping Lines Investing In Reefer Containers?

Despite challenges in container shipping, the demand for transporting climate sensitive cargo – such as food and pharmaceuticals, has risen significantly over the last few years.

The controlled atmosphere technology used in many reefer containers allows for the air’s composition inside the refrigerated containers to be altered to accommodate the needs of the product being transported. This ensures that fruits, such as avocados and bananas, enter the marketplace at the optimum ripeness.

We see particular growth potential in the fruit sector. – Juergen Pump, Senior Vice President, Hamburg Sud North America

To accommodate the increase need for refrigerated containers, industry leaders – like Maersk Line and Hapag-Lloyd, have made investments in their reefer fleet. Others, such as CMA CGM, have said they will add more reefer assets before the close of 2016.

reefers higher margin business

Shipping lines have been targeting the reefer sector because of its growth and because of its economies of scale. Reefers tend to be a higher margin business as there’s more value-add you can bring to the product offering and to customers. Shifting trade directions are also a factor. – Nigel Webster, Director of Refrigerated Containers, Seaco

Recent investment into reefer development has introduced new shipping options for the transportation of fruits and vegetables to/from markets like Florida, Mexico, Brazil, and Cuba. This increasing demand in emerging and developed economies will certainly bode well for carriers and container lessors alike.

Container lessors can provide a valuable service by bridging the gap between the need for new investment from cash-strapped container lines and the increasing need for more reefer boxes in the marketplace. This approach is more attractive to carriers because it allows them to hold their capital and reduce their exposure to additional operating costs. Investors are drawn to invest in containers because of the long-term benefits and lower risk.

reefer cargo means food always moves

Reefer cargo means food and food always moves. – Nigel Webster, Director of Refrigerated Containers, Seaco

Although Maersk Line is the biggest owner of reefer containers worldwide, the next four largest owners are leasing companies. In fact, of the 2.5 million reefer containers worldwide, leasing companies own approximately 42 percent of those assets.

Container leasing companies own 42 percent of reefers worldwide

Fact: Container leasing companies own 42 percent of the 2.5 million reefer containers worldwide.

Shipping Industry is Good For Consumers, Economy & Investors

triple-e container shipThe global economy is dependent on the transportation of goods and commodities across oceans, in the air, and over railways and highways. The never ending flow of raw materials and finished products in generally out of sight and far from the attention of the common person, however our lives would be completely different if not for the necessities and conveniences made possible by the international shipping industry.

The shipping industry makes both domestic and global manufacturing and transportation possible, through the movement of raw materials, commodities, and finished products, while simultaneously providing for the delivery of goods directly to consumers. To be clear, there are a large variety of commercial transport methods to be found within the shipping industry. The types of methods include bulk transport of commodities in rail cars to highly specialized “inter-modal” container shipping. Currently, there are four major modes of transport that exist in this industry: maritime, air, rail, and freight (trucking).

The shipping industry is one of the largest and most diverse industries in the world. The global shipping industry is a small sub-category of the $9 trillion global trade market for goods and services. The United States shipping industry for example, encompassing the four major modes of shipping transport and associated logistics, totaled $1.3 trillion in 2012, making up 8.5 percent of the domestic gross national product [United State Department of Commerce]. Moreover, and not to be discounted, the industry is a significant employer. In fact, the freight segment alone employs 3 million people in the United States.

For you to invest in the shipping industry it is imperative that you have a general understanding of how the shipping industry works. Marine shipping in particular takes place on a variety of different vessels: general cargo ships, container ships, bulk carriers, and tankers. General cargo ships, as you can tell from their name, carry a wide assortment of items loaded on pallets. Container ships, on the other hand, carry rows of uniform steel containers loaded with materials and goods that get stacked on one another. Bulk shippers primarily convey commodities in large amounts, such as iron ore, coal, grain, and forest products. Finally, tankers carry crude oil, chemicals, and other liquid cargo (including refined petroleum products).

When it comes to transporting consumer goods, the container shipping industry is especially noted for its efficiency. Amazingly, the cost to ship a kilogram of coffee from Thailand to the United Kingdom is an astonishingly low $0.15. Because of this low cost and high efficiency those investors looking for an alternative investment should keep a sharp eye out for opportunities to invest in containers.