LONDON, 02.02.2018 – We managed to catch up with Thomas Eskesen, founder of Eskesen Advisory ahead of the Berlin Fruit Logistica to get his perspectives of the state of the industry and key trends and outlook for 2018. Thomas is based in Denmark but travelled over 150 days in 2017 and through his work as trusted advisor for many industry players has unique insights.
#1: What were the key developments in the shipping sector in 2017 as far as reefer cargoes are concerned?
It was a super eventful year but if I should highlight the 3 most important developments they would be:
- Accelerated carrier consolidation and mergers i.e. Cosco and OOCL, Maersk and Hamburg Süd and 3 Japanese Lines – NYK, KL and MOL – merging to become ONE. Shippers are worried this means less competition and fear rate increases in the medium to long term.
- Under investment in reefer equipment continued during the 1st half but the situation improved significantly in the 4th quarter with December alone producing more new containers than Q1 alone. That is very unusual but a good sign that carriers and leasing companies are investing again in equipment. The new reefer manufacturer Fuwa in China is off to a strong start. This comes on the back of reported shortages in many areas during 2017.
- Telematics is coming to reefers. The launch of Maersk’s RCM/GPS product, allowing cargo owners much-needed transparency, will have a profound impact on the industry in years to come. It will allow cargo owners to make much better decision on cargo care and lead to less waste in the cold chain. I predict significant pressure on Maersk competitors to match this unique offering.
Some may say that Seatrade’s quick venture into and exit from container vessels belonged to top 3 but it did not have global implications, hence it’s not on my top 3 list.
#2: How do you see demand developing across the globe?
Most analysts predicted a 4% CAGR growth for the refrigerated segment driven mainly by global population growth and wealth accumulation in China in particular. Somewhat surprisingly, the most recent Seabury global data shows only 3% growth in 2017, driven by frozen at 7% whereas shipments of fresh/chilled were flat versus 2016. Inside the latter figure there is a lot of variation, but the bottom line is that the supply base was challenged by weather.
#3: Given your background from Maersk and your subsequent independent advisory work, can you share some insights into how important reefer cargo is for the shipping lines?
As a general rule of thumb, reefer cargo is about 10% of the world’s container cargo. Historically, the revenue has been better than dry even when offsetting the added cost of the equipment, power, positioning etc. In recent years we have seen significant rate reductions and in many trades the dry business is more attractive than reefers now.
I sense most shippers realize they are getting a bargain on ocean transport when compared to the value of cargo and against other transport modalities, notably trucking. But, as long as lines price aggressively shippers have to take advantage to remain competitive in their own industry. There is a lot of shipper noise about deteriorating service levels, so in fact many shippers have an interest in higher but fair and consistent shipping supply chain costs. This will help lines invest more in reefer services and exception handling.
#4: What are the key trends and issues to watch for in 2018?
I think most of the top global issues in 2018 will be based on key events in 2017 i.e.:
- Shipping consolidation means that the top 3 carriers will handle about 50% of the world’s reefer container cargo. That gives them more horse power to focus on reefer-centric services and innovate around reefer shippers. They may try value-added inland and storage services to differentiate. Some of the smaller shipping lines will be extra exposed in the reefer segment. It will also be interesting to see if ONE and Cosco want to become serious global reefer players. That requires not only a lot of cash but also people expertise that they do not have today.
- I am seeing a lot of interest in this segment. My prediction is that RCM/GPS solutions will be a qualifier to do business in the future so the board room discussion at carrier level should be less about if they should invest but rather how to implement enterprise scale telematics solutions.
- I think we will see more blockchain-type development and collaboration, for example to reduce paper work and improve food safety. Cryptocurrencies are controversial today but once the hype has settled, people will find real value in smarter trade finance and payment solutions thus far not provided by the banks, so we should watch the space.
Lastly, let me just remind all of us how fortunate we are we live in the world of containerisation. The container has enabled global trade and improved our lives in a way we often take for granted. I had dinner last week with a European banana importer who said that all their trade with the country of Peru was only made possible due to the flexibility of the container. The story applies equally well to movements of blueberries, apples, pears, citrus etc. so it is a good segue into Fruit Logistica where shippers and importers from around the world gather and always know that there is a logistics solution available if they make a trade!
10th Cool Logistics Global
2 – 4 October 2018
Information for the media
For more information on this release, to discuss media partnerships and/or press passes to attend the 10th anniversary Cool Logistics Global Conference & Exhibition, please contact: Holly Thompson, Communications Executive, Cool Logistics Resources Ltd | Tel +44 20 3327 0575 | Email: firstname.lastname@example.org
About Eskesen Advisory
- Thomas Eskesen founded Eskesen Advisory in 2015.
- Eskesen Advisory specializes in Global Cold Chain matters and work with Senior Industry Executives to help them improve their odds of winning in an increasingly turbulent world.
- Accelerate commercial success
- Validation of current strategy
- Review of whether current strategy is adequate for the future
- Seek top external cold chain expertise
- Have a sounding board to test assumptions, roadmap, sequencing
- Access to EA network and connections among Cold Chain asset and technology players
- Access to EA network and connections at shipper-importer executive level
- Have some very specific knowledge gaps they want to close
Prior to founding Eskesen Advisory, Thomas Eskesen worked for the AP Moller / Maersk Organisation for almost 30 years. He spent 9 years in Asia and 3 Years in USA before starting Maersk Line’s e-commerce division in 1999 which among others lead to Inttra.com which he founded. Between 2006 and 2015 he was in charge of Maersk’s Refrigerated Cargo division and was part of Maersk Lines Global Leadership Team. He has attended senior management courses at Insead, Harvard Business School, IMD and Columbia Business School. He is 52 years old, a Danish citizen, married to Naomi from India and has two kids Daniella 20 and Isabella 18.
Thomas Eskesen chaired the Cool Logistics Global event in 2016 and 2017.
About Cool Logistics
Cool Logistics Resources Ltd. provides top-quality business intelligence and networking for supply chain, logistics and transport professionals in the international perishables markets.The annual Cool LogisticsTM Global Conference in Europe connects perishable cargo owners with cold chain logistics and transport professionals from around the world to assess key market trends and operational best practice for the international movement of chilled and frozen cargoes by air, land and sea.
The live event is supported year-round by the Cool Logistics discussion group on LinkedIn, social media and website activity, and the online Cool Logistics Community for Conference participants.