This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
Container shipping remains challenged given more moderate growth in the global economy and continued uncertainty related to the ongoing trade dispute between the United States and China. Demand for new dry equipment and depot units remained weak for most of 2019, reflective of a peak shipping season that never materialized. However, the underlying fundamentals of global trade and the need for continued investment in new assets and equipment are not expected to change despite difficult conditions that may exist right now.
The refrigerated cargo sector, arguably the most profitable for the shipping lines, remains resilient and is poised to grow at a faster pace than the dry cargo sector once again in 2020. Driven by population growth, stronger demand for protein in markets like China, and mode conversion from air to sea, the containerized refrigerated sector is expected to grow 6 to 9 percent in 2020.
A big question for shippers of frozen and perishable cargoes in 2020 will be one of having access to enough refrigerated equipment — and having it in the right place at the right time. This growth in demand for refrigerated containers will be further supported by the impact of IMO 2020 and continued conversion from aging bulk refrigerated cargo ships to containers.
We estimate approximately 120,000 new refrigerated containers were produced in 2019. Given retirement of aging assets, required replacements, and growth in this sector, that’s not enough to sustain future growth.
SeaCube Container Leasing continues to lead the refrigerated equipment sector for the last three years, investing in new equipment, partnering with technology providers, and being mindful of global environmental considerations. Equipment leasing offers shipping lines efficient and effective alternatives for network management to meet their customers’ needs; and with leasing requiring less up-front capital investment, resources can be allocated to other priorities.