Perishables shippers high and dry as reefer rates soar and boxes run short

Source: The Loadstar
Date: 2nd November 2021

Perishable shippers are being left high and dry by shipping lines opting to carry general cargo in unplugged reefers, increasing equipment shortages.

And, according to Drewry, reefer freight rates increased again in Q3, with the analyst expecting a similar acceleration throughout next year.

A weighted average of rates across the top 15 “reefer-intensive” deepsea trade lanes rose 48% between January and September, Drewry said, and by the end of Q4, these gains are expected to be as much as 55%.

It added: “Booming reefer freight rates are following in the wake of the dry cargo sector, as operators realign risk/revenue expectations for refrigerated cargo, in line with more inflated system costs and operational challenges, such as extended dwell times at transshipment ports and longer container equipment cycle times.”

As a result, Drewry noted, shippers of lower-value cargo, such as bananas, onions, citrus, or frozen vegetables, are now confronted with much higher shipping costs after enjoying years of relatively low freight rates, which helped them develop markets far afield.

The analyst says seaborne reefer traffic is expected to grow 3.2% this year, to 136m tons, with all commodities showing growth, except bananas.

“Trade in meat to Asia is slowing, amid lower pork prices in China, and the banana trade is expected to decline by 5% this year, owing to disease in the Philippines crop and low banana prices in general,” Drewry explained.

While the production of new reefer containers has reached a record high of 170,000 feus this year, this has “not necessarily resulted in improved equipment availability”, Drewry said, since carriers had used reefers to carry dry cargo.

The main reason for the equipment shortage was port congestion. It is obvious that the risks grow if a reefer box containing perishables spends three weeks on a ship anchored outside a port without available berthing. Furthermore, in some ports, the container plugging areas are being used partly for dry cargo container storage.

Since the pandemic began, shipping lines decided dry cargo would take priority over reefer. This isn’t new, but it has surely become an emphasized phenomenon, given the exceptional circumstances.

Perishable shippers were, in general, “fighting for space” and trying to deal with the global port congestion crisis, with feeder shipping becoming an increasing liability.

Feedering is being replaced by multimodal, whenever workable, given quayside congestion – empty the unit at a cold store and then truck or rail, versus waiting for the feeder vessel.

Given the high costs of transport from distant origins, the “local sourcing” trend was also gaining some traction.

Comparably low-value products like fresh produce are more sensitive if food retailers do not reflect the increase in final consumer prices.

NEOLink cooperated with our order processing system. He did not replace it or force solutions. Logfret did it better than other companies on the market – it adapted its system to ours. Logfret didn’t come to us saying, “We have this solution, and you either use it or we won’t cooperate.

Procurement Director

Pumps Manufacturer

We made a huge improvement in global visibility with a global platform—anyone can log into NEOLink and look at a shipment anytime, anywhere in the world. We wanted a freight forwarder with a good technology platform, which could handle the complexities of our business and we found NEOLink!

A global leader in performance materials and specialty chemicals

My suppliers have less or zero experience with international logistics. Thus, not able to create proper documentation which leads to tremendous delay. Thanks to Logfret who provide training to all suppliers and work with us to build up a consolidation hub to reduce transportation costs significantly.

One of the world’s leading designers, manufacturers and distributors of ride control products