Cold Chain Market Report

Special Report

By Richard Bright

Cool Carriers

Ordinarily , that ’ s where the story would end . Two rivals battle for business ; one wins , the other doesn ’ t . However , there are clearly other commercial considerations at play .

Cool Carriers has won the weekly , six-month , seven-vessel Brazil-to-Europe Agricola Famosa melon contract for this coming season , besting reefer operator GreenSea , the contract ’ s former holder .

Cool is the largest reefer operator in terms of vessel numbers and capacity ; GreenSea has a lower number of smaller units . Cool said that the charterers had wanted to increase the volume of weekly shipments on one hand and remain with specialized , or breakbulk , reefers on the other — therefore , Cool Carriers was a natural choice .

Cool added that other than the increase in volumes , there are no major changes to the service — i . e . the service is from week 35 to week eight ( 2025 ), loading in Natal , Brazil , and discharging in Vigo , Spain ; Rotterdam ; and Dover , England .

Sweden-headquartered Cool acknowledged that GreenSea had done a good job wrestling the trade back from the container lines to the specialized mode .

Ordinarily , that ’ s where the story would end . Two rivals battle for business ; one wins , the other doesn ’ t . However , there are clearly other commercial considerations at play . If it was true that size alone was the determining factor , GreenSea parent Seatrade would have been the obvious choice for Famosa — partly for loyalty , partly for continuity and not least because the Seatrade / GreenSea combination can offer a broader range of vessel sizes .

However , if the speculation that the $ 130 pallet rate Famosa agreed upon with Cool is accurate , the switch merits further analysis . That is because this figure is significantly below the rate offered by Seatrade / GreenSea to extend the contract . Cool can presumably offer a more competitive rate because of the range of headhaul and backhaul cargo combination possibilities it has in and out of the east coast of South America , as well as the Baltic . For example , Cool can double dip in Argentina and southern Brazil for deciduous and / or meat if the melon crop is temporarily short . Likewise , if necessary , it can load ammonium nitrate from St . Petersburg on the return voyage .

But there are other factors to be considered . The specialized breakbulk reefer fleet is aging ; Cool is the only owner / operator currently investing in specialized tonnage . Following the delivery of its five 905-cubic-feet E-Class vessels , Cool has a program of between 12 to 14 vessels in the range of 630 / 660 / 700 cubic feet to be delivered before 2027 . Those units will replace Cool ’ s older tonnage , which will be demolished , and reduce its reliance on chartered-in vessels such as the Chartworld family class .

In contrast , the six-vessel reefer newbuilds Seatrade has commissioned are fully cellular . The two operators have fundamentally different visions on the future development of the supply side of the reefer trade .

The specialized mode is systematically losing its share of the global reefer trade to the carriers . But the banana , citrus and top fruit trades into Russia , which Cool shares with Mediterranean Shipping Co ., continue to be money-spinning cash cows for both operations and will likely remain so long after the war in Ukraine ends . Cool is also strong in New Zealand ( kiwifruit ) and Chile ( grapes ) and is the senior partner to Seatrade in the Reefer Alliance for citrus out of Morocco and South Africa to the US , northern European continent and the Baltics . Cool has evidently reasoned , with some justification , that cargo is king and therefore control of cargo is the strategy to adopt .

The position is as follows : On the one hand , Cool is cash rich . On the other , it is under pressure to fill the newbuild capacity it already has as well as what is scheduled to be delivered . The cargoes under its control will allow Cool the flexibility to employ its fleet optimally , which gives it a significant competitive edge , enabling it to undercut its rivals to gain market share and cross-subsidize , if necessary . Cool faces no obvious threats — the possibility of an alternative , Russia-based container carrier setting up shop to compete with MSC and Cool on key reefer trades into the Baltic , for example , is remote , certainly given the current charter market for container ships on the one hand and global shortage of reefer containers on the other .

While GreenSea will be disappointed that it has lost the trade on which it worked so hard to win , if Cool continues to leverage its financial advantage , it is Seatrade ’ s liner and contract businesses that are in greater danger .

On the other hand , if rates were the singular criterion for cargo service selection , all reefer products would by now be transported in containers on carrier schedules . While Cool will be able to service the Famosa contract on terms that may be self-serving commercially and strategically , if those terms have a negative impact on service levels , the contract may not last long . The chief reason why the reefer mode is preferred by some cargo is because it is fast , dedicated and direct . Cool will surely understand that it cannot afford to jeopardize that .

email : richard . bright @ spitfireuk . net

32 Journal of Commerce | September 23 , 2024 www . joc . com