The perishables market is seeing new headwinds as a shortage of reefer equipment persists. Consequently, reefer freight rates are reaching a new high, and some perishable products are being priced out as the transportation cost exceeds their selling price.
Since last year, reefer shipping company Seatrade has occasionally used classic yard-and-stay reefers to serve South African exporters on routes to Europe, according to Fresh Plaza – and demand for these vessels is booming. As an example, the firm recently deployed a 1990s-era reefer, Whitney Bay, to ship fruit out of Cape Town.
The use of specialized reefer vessels has been on the decline in favour of the container-shipping model, but container port disruption and the limited availability of containers is forcing fresh produce shippers to fall back on traditional reefer ships.
An imbalance of equipment location and demand is partly responsible for the shortage. For example, at the Ports of Cape Town and Durban, in high season the number of full containers going out is very high compared to the number coming in.
A recent market update released this week by DHL Global Forwarding underscores the tumultuous global reefer shipping market.
“It’s tough times for many reefer shippers and importers these days. A lot of places in the world at the moment lack reefer equipment. Additionally, dry container rates keep increasing to levels above reefer containers. As a result, shipping lines allocate space to dry instead of reefer containers. This causes expensive reefer equipment sometimes to be stuck for more than six months in Asia,” notes the report.
It also notes that the reefer freight rates are on an upward trend, recording an increase of more than 50 percent in Q3-Q4 year on year. This is expected to affect shippers and consumers alike.
“We will see this continuing in 2022 and potentially in 2023; that is, fewer products in the supermarkets and mainly larger shippers with the strong financial background being able to ship,” DHL said.
According to the update, transpacific trade routes are the most hit by space scarcity. Vessels are running full with reefer plugs being completely utilized.