Drewry: Reefer container availability to remain tight

Drewry: Reefer container availability to remain tight

Reefer container equipment availability will remain tight over the next few years which will impact shipping capacity supply and freight rates at seasonal peaks according to Drewry.

Production of new refrigerated containers recovered during 2017 and gathered pace in 2018 after a dramatic halt in expenditure by cash-strapped carriers in 2016.

Drewry expects the reefer container equipment fleet to maintain a CAGR of 4.5% over the next five years which is slightly ahead of anticipated growth in containerised cargo traffic but will not be sufficient to bring supply back into equilibrium.

Contrastingly, there remains ample supply of containerships reefer slot capacity on most trades, it noted, though certain routes with a high proportion of reefer cargo can experience tight space during seasonal peaks.

Martin Dixon, Drewry’s director of research products, said: “While we expect container carriers to continue to improve the effective availability of reefer containers through more centralised inventory and imbalance management, Drewry’s data indicates that equipment supply conditions will remain tight.

“With cargo owners increasingly reliant on container carriers to move perishable products, given the ongoing decline in the specialised breakbulk reefer shipping fleet, refrigerated shipping capacity could be constrained during seasonal peaks.”

Global seaborne reefer trade continued to grow in 2018 but the pace of expansion was slower than expected and is projected to be more muted over the coming years.

The analyst estimates that the volume of seaborne reefer cargo grew 3% in 2018 to 129m tonnes which was weaker than the 4.4% gain achieved in 2017 and the 3.5% average annual rate recorded over the prior 10-year period.

The weaker trade development was driven by a slowdown in shipments of meat and poultry, fish and seafood, and banana shipments, as well as a contraction in deciduous trade.

Looking ahead, Drewry forecasts that worldwide seaborne perishable reefer trade will continue to expand but at a below trend rate of 2.7% a year in the period to 2023 as certain seasonal climate related factors such as El Nino slow production output in the short term and rising geopolitical risk impacts wider trade growth prospects.

It anticipates that containerised reefer traffic will expand at a faster pace as its share of the trade is forecast to rise from 81% in 2018 to 85% by 2023 as the specialised breakbulk reefer shipping fleet continues its contraction.

Dixon added: “Despite a slowdown in the pace of growth in global seaborne perishable cargo trade, the additional boost of modal shift is providing container carriers with an attractively expanding market in reefer cargo.

“Excluding a particularly weak 2019 caused by certain one-off weather related factors, forecast growth thereafter is expected to match that of the wider container shipping market with annual growth of around 4%. And together with tight container equipment availability we expect reefer container freight rates to continue to outperform dry box rates.”