Drewry cautioned that some stabilization has already taken place for several reefer sectors and this will be followed by a slight decline through 2023 as shippers fend off unsustainable rate increases.
Drewry’s global reefer container freight rate index, a weighted average across 15 major reefer penetration routes, increased 50.4 % year-on-year in the second and third quarters and is estimated to grow further but at a slow pace. However, the east-west routes have only increased rates modestly in the past four quarters as capacity pressure eases, thanks to slower pork trade from Europe to North America to Asia.
The research predicts lower reefer shipping prices in 2023, but to a much lesser extent than dry container prices, as reefer container prices continue to dampen trade more broadly. Global maritime reefer traffic recovers 2% in 2021 after the pandemic rages in 2020, reaching 137 million tonnes, but has fallen to 1.1% year-on-year in the first half of the year now. Drewry predicts commerce will end the year with an annual gain of just 1%.
The reefer supply chain is in a risky period with extremely high input costs for materials such as fertilizers, packaging, and energy, to name a few. Freight rates are still unsustainable and many BCOs, especially those that ship lower-value products are shipping less due to their out-of-market prices, said Philip Gray, head of Reefer Shipping research. He further stated that the next round of freight rate negotiations between carriers and shippers should take this fact into consideration, leading to a slight decrease in reefer freight rates through 2023.
Despite the uncertainty at hand, Drewry expects reefer freight trade growth to hasten over the next few years, at an average annual rate of 3% by 2026. Modal switching will continue to be a key feature, with the containerized cargo share expected to grow at a faster rate of 3.7 CAGR, as the dedicated submarine fleet continues to age staggeringly with very few units on the order list.
“Despite concerns about a slowdown in global trade, supply chain disruptions are expected to remain a feature through 2023,” Gray added. “As BCOs have learned the hard way, reefer trade is secondary to the much larger and more prevailing dry freight trade, which determines transportation network priorities. This reiterates the need for shippers to have better control over their logistics to ensure on-time delivery and optimal product integrity.