Reefers are proving to be very lucrative for shipping companies at present, with rates having skyrocketed.Figures from supply chain consultancy firm Drewry's Global Reefer Container Freight Rate Index show reefer container freight rates are up by 50% on last year and they’re expected to continue to increase.The index indicates that reefer rates are fast matching gains made in dry cargo pricing, and with estimates of further increases in the third quarter, they will outpace dry box rates. According to the latest forecast, some stabilisation is, however, already under way on some reefer trades and this is expected to be followed by modest declines through 2023, as cargo owners push back on unsustainable freight rate increases.The index, a weighted average of rates across the top 15 reefer-intensive trade routes, rose 50.4% year-on-year in the second quarter, and the third quarter reading is expected to climb further.“The reefer supply chain is precarious, with extremely high input costs for materials such as fertiliser, packaging and energy, to name just a few. Freight rates remain unsustainably high and many BCOs, particularly those moving low-value products, are shipping less as they are priced out of the market,” said Drewry’s head of reefer shipping research Philip Gray. “The next round of freight rate negotiations between carriers and cargo owners is expected to take heed of this reality, leading to a modest decline in reefer freight rate levels through 2023.”He said East-West routes had already seen only modest freight rate increases over the last four quarters, as capacity pressure had eased thanks to the softening pork trade from both Europe and North America to Asia. “The exception has been the westbound Transatlantic which saw volume jump as much as 9% y-o-y, while average freight rates doubled over the same period, as early opening of the North American economy boosted consumption in the hotel, catering and entertainment sectors.”He said all indications were that the reefer rates would soften, albeit to a much lesser extent than dry box pricing, as reefer rates continue to lag behind those of the wider trade.Gray said despite the present uncertainty in the market, Drewry expected seaborne reefer trade growth to accelerate over the coming years, to expand at an average annual rate of 3% over the years to 2026. Modal shift would continue to be a key feature, with the containerised portion forecast to grow at the faster pace of 3.7%, as the specialised reefer ship f leet continues to age, with very few units on the order book.“Despite fears of a global slowdown in trade, supply chain disruption is expected to remain a feature well into 2023,” added Gray. “As BCOs have learnt to their cost, the reefer trade is secondary to the much larger and dominant dry freight trade which drives carrier network priorities. This reaffirms the need for cargo owners to take more control of their logistics to ensure timely delivery and optimal product integrity.
