Perishable exporters should brace for an increase in reefer container freight rates in 2018, according to Drewry’s director of research products, Martin Dixon. While freight rates on specialised reefer vessels would likely remain unchanged, reefer container ship rates would rise further, he said. Speaking during a webinar last week on the global reefer market outlook, he said while average dry box rates had retreated from the first quarter’s high, average reefer rates had held up. “The recovery in reefer rates has been partly driven by a temporary shortage of empty reefer containers following a pullback in container building last year. Most notably the shortage was experienced in April and May, particularly on the Europe to Asia trade. “Global production of new reefer box equipment was at a low last year of 80 000 TEUs, the lowest since the 2009 recession,” he added. “And production figures for the first half of this year are probably not much greater than last year.” Shipping lines are however becoming more efficient with the turnaround of their equipment – and with the synergies of consolidation in the sector, the slowdown in production may not be as serious as feared, in his view. Dixon pointed to the considerable consolidation in the container ship industry as a potential risk to shippers in terms of availability of alternative sources of shipping supply – “particularly with the continued shrinking of the specialised reefer mode.” But the upside is that higher freight rates would provide great profitability to shipping – and therefore funding for investment in equipment and technologies. Dixon believes that demand for reefer cargo will continue to grow – albeit at a slower rate than it has in the past decade. The seaborne perishable reefer trade had been remarkably resilient to global issues – whether economic or climatic – Drewry senior reefer market analyst Kevin Harding pointed out. “While individual trades may have experienced fluctuations, it’s clear that overall there has been a steady growth. In 2006 seaborne reefer trade comprised 85 million tons – and by 2016 this had increased to close to 117 million, an average year-on-year growth of 3.3%.” Harding believes the industry is at a crossroads. “Perishable reefer cargo will continue to increase but there will be challenges - like Brexit. “The specialised reefer market will continue to shrink – as it has been doing so for 17 years. People talk of the imminent demise of the specialised reefer fleet – and with so few newbuildings for this mode, an ongoing reduction is inevitable.”
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The upside is that higher freight rates will provide great profitability to shipping – and therefore funds for investment in equipment and technologies. – Martin Dixon
