Here is a report by Argelis Moreno De Ducreux, Leader, Liner Services Segment, Executive Vice Presidency for Planning and Business Development from the Panama Canal Authority.
Transportation development and new technologies are impacting the trade of perishable goods in refrigerated containers, known as reefers. With an increase in consumption of these goods, reefer trade is expected to grow exponentially in the coming years.
Today, the main trade through the Panama Canal consists of containerized cargo loaded on container vessels, but in recent years, there has been a transition from conventional reefer cargo vessels to containerized vessels. This trend will continue with the addition of new services through the Panama Canal that will better serve the refrigerated cargo market and its trade route. The Panama Canal Expansion will bring new opportunities to this market segment, offering the capacity necessary to respond to this growth, which will boost the trade of refrigerated products.
Recent trends suggest that the supply chain will shift from container vessels to more versatile reefer containers. Container ships on the other hand will only be required to offer reefer plugs, because the technology change is made in the container itself, contrary to the conventional reefer fleet where the investment in technology has to be made for the entire cargo compartments. This flexibility of container ships allows liner services to carry all types of refrigerated commodities.
According to Drewry, from a capacity perspective, the existing global container ship fleet provides 1.8 million TEU of reefer container capacity. By comparison, between 93.9 percent of the world’s reefer capacity in terms of cubic feet is utilized by container ships. From the demand perspective, in 2014, the worldwide perishable trade was 189.5 million tons and approximately 55 percent was seaborne; 75.4 percent of total seaborne reefer cargo was transported in reefer containers and it is expected to increase to 82.3 percent or 19.4 million tons approximately by 2019, being meat, poultry, fish, seafood and bananas, the main traded commodities.
These investments indicate the high demand shippers are experiencing for transporting refrigerated commodities. With the Panama Canal Expansion, the temperature-controlled logistics industry will benefit from Neopanamax container vessels that will move twice, or even triple, the amount of cargo allowed today.
Currently, growing demand and usage of reefers containers is facilitated by continued technological advancements in the cold-chain industry, all of which has led to substantial shifts in the transshipment options available to shippers. Container ship operators now offer technologies that extend the life of goods and slow down the ripening of products. For instance, new reefer containers can control temperatures within plus or minus 0.25 degrees Celsius with a 65 percent reduction in energy consumption when compared to previous technologies. These containers are also able to control carbon dioxide to slow ripening and remove ethylene produced by fruits and vegetables that might otherwise deteriorate surrounding products.
More importantly, refrigerated container vessels are able to preserve the cold chain during the entire shipment cycle. Due to minimal handling, reefer containers maintain the same temperatures from the producer to consumer, guaranteeing the extended life of a product.
The strong transition into reefer container ships is already evident today. In fiscal year 2015, nearly 18 percent of the total TEUs transported through the Canal were reefer containers. To date in this fiscal year, 13.1 million long tons of reefer cargo has been transported thru the waterway and container ships made up 74.6 percent of this cargo. Currently, there are eight liner services via Panama Canal that serve this trade route. In fact, the average vessel capacity from the west coast of South America to Europe is 3,510 TEUs, making this route the highest container reefer capacity and the most important for the transportation of perishable goods with an average of 20 percent reefer plugs on board.
However, with the opening of the Expanded Canal, carriers have shown interest to move from Panamax container vessels to Neopanamax container vessels of about 6,500 TEU capacity. Merging actual services could be an option to handle this cargo in bigger vessels. Carriers and shippers are likely to take advantage of the cost reductions and the advantages of containerized reefer cargo provided by the use of larger ships.
The highly anticipated Expansion of the Panama Canal will increase the maximum TEU capacity of reefer vessels and help Panama increase its exports of perishable goods. The Panama Canal will continue to invest in new shipment options and adapt to changing trade patterns for years to come. The Panama Canal Expansion will bring new opportunities to this market segment, offering the capacity necessary to respond to this growth, in turn boosting the trade of refrigerated products.
