NIKOS ROUSSANOGLOU The significant rebound in international shipping the last few months could not but affect the market of reefer ships, which has been going through a serious problem of survival since 1997. Reefers carry mainly fruit (bananas), wheat and fish. Shipowners as well as market observers point out that «smiles have at last returned to this sector, dubbed the ‘Cinderella’ of shipping.» «For the first time in the last seven years, there is a balance between supply and demand,» a representative of the Greek group Lavinia/Laskaridis told a recent Lloyd’s survey. This is attributed to a series of factors: First, the number of reefers has been reduced, as last year some 30 vessels were scrapped without being replaced by new ones. At the same time, no problems were reported in global fruit production, as southern hemisphere exporters, such as Chile, registered a record number of cargos to other countries. Similarly, demand in countries such as Russia and China appears particularly high. Another reason the reefers market seems positive is that container owners (traditional reefer competitors) are now placing emphasis on dry cargos where profit margins are even greater. As a result, cargo prices in reefers have shown a steep rise the last few months. And as in the coming months no new reefer ships will be built and more old ships are expected to be withdrawn due to the generally aged fleet, analysts observe that chartering prices will further rise, at least for all of 2005. There also are those who are even more optimistic, suggesting the rise will continue at least into 2007, as a steady increase in exports is expected from fruit-producing countries in the southern hemisphere. These forecasts are presently being confirmed by cargo leases signed for the start of the new year. According to provisional figures, contract renewals for the largest conventional ships range from 25 percent to 30 percent above 2004 prices. Rises for smaller vessels are even greater, by as much as 45 percent. Also positive is the willingness by representatives of the fruit and vegetable industries to sign longer-term contracts. Until recently, signing a contract to lease a reefer for more than a year was a rare phenomenon. Nowadays more and more agreements are for three years. In the light of these developments, a serious problem arises: The vast majority of the global reefer fleet is aged, with antiquated refrigerating technology. Therefore, fewer and fewer ships must handle a growing number of orders. In short, demand now outweighs supply. Most shipping companies are finding that orders they receive exceed their ships’ available capacity (in tons). Nevertheless, few shipowners appear willing to proceed with new investments to renew their fleet. As the reefer market had faced big problems at the start of the decade, several years of steady profits are required before companies will decide to make new investments. After all, despite the significant rise in cargo prices, the reefer market continues to trail the bulk and container sector. Over the next two years, the delivery of a series of new container ships, with a capacity of 9,000 teu, is expected, many of which will be able to carry fridge containers. Should the dry cargo container market slow its growth rate for any reason, container companies could transfer part of their activity to reefers. Besides the above, there also are objective factors that hamper the renewal of the reefer fleet. The few remaining shipyard slots mean that at least until 2008, the delivery of new reefers is improbable, without adding the particularly high cost of construction. Shipowners are therefore reluctant to proceed with such big investments.