Reefer container freight rates across global trades rose over 50% in the year to the second quarter, matching gains made in dry cargo pricing, according to Drewry's recent Reefer Shipping Annual Review and Forecast 2022/23 Report.
It also estimates this to increase further in the third quarter, outpacing dry box rates — although Drewry noted that "some stabilisation" is already underway 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.
Drewry's Global Reefer Container Freight Rate Index, a weighted average of rates across the top 15 reefer-intensive trade routes, saw rates rose 50.4% YoY in Q2 and the Q3 reading is expected to climb further, though the pace of growth will slow.
Photo: Drewry
However, it added that the East-West routes have seen only modest freight rate increases over the last four quarters, as capacity pressure has eased thanks to the softening pork trade from both Europe and North America to Asia.
Reefer rates to soften in 2023
Drewry noted that the exception has been the westbound Transatlantic which saw volume jump as much as 9% in the year to Q2, while average freight rates doubled over the same period, as the early opening of the North American economy boosted consumption in the hotel, catering and entertainment sectors.
"Looking ahead, 2023 reefer container freight rates are expected to soften, but to a much lesser extent than dry box pricing, as reefer rates continue to lag that of the wider trade," the Drewry report added.
Meanwhile, global seaborne reefer traffic recovered by 2% in 2021 from a pandemic ravaged 2020, reaching 137.4 million tonnes, but slowed to 1.1% YoY in the first half of 2022.
Drewry said with this, it now forecasts that the trade will end the year with an annual gain of just 1%.
"The reefer supply chain is at a precarious moment with extremely high input costs for materials such as fertilizer, packaging and energy, to name a few. Freight rates remain unsustainably high and many (Beneficial Cargo Owner) BCO's, particularly those moving low-value products, are shipping less as they are priced out of the market," said Philip Gray, Drewry's head of reefer shipping research.
"The next round of freight rate negotiations between carriers and cargo owners are expected to take heed of this reality, leading to a modest decline in reefer freight rate levels through 2023," Gray added.
Seaborne reefer trade to grow
Despite the present uncertainty, Drewry expects seaborne reefer trade growth to accelerate over the coming years, to expand at an average annual rate of 3% over the years to 2026.
It noted that modal shift will continue to be a key feature with the containerised portion forecast to grow at the faster pace of 3.7% CAGR, as the specialised reefer ship fleet continues to age inexorably 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," Gray said.
"As BCOs have learnt about 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," the head of Drewry's reefer shipping research added.
