Availability of reefer container equipment predicted to remain compact
The general availability of reefer container equipment is expected to remain tight during the next few years. After the dramatic halt in reefer equipment expenditure by destitute shipping lines in 2016 which led to acute shortages in several regions, manufacture of new refrigerated container equipment recovered during 2017 and continued to gather pace in 2018. In Drewry report, 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 containerized cargo traffic. But it will still not be sufficient to bring supply back into equilibrium.
By contrast, there remains an ample supply of containership reefer slot capacity on most trades, though certain routes with a high proportion of reefer cargo can experience tight space during seasonal peaks.
“While we expect container carriers to continue to improve the effective availability of reefer containers through more centralized inventory and imbalance management, the report 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 specialized break-bulk reefer shipping fleet, refrigerated shipping capacity could be constrained during seasonal peaks.” said Drewry’s director of research products.
Global seaborne reefer trade continued to grow in 2018 but the pace of expansion was slower than the trend and is projected to be muted over the coming years. The volume of seaborne reefer cargo grew 3% in 2018 to 129 million tonnes which was weaker than the 4.4% gain achieved in 2017. Also, reefer trade development was driven by a slowdown in shipments of meat and poultry, fish and seafood, and banana shipments.
Drewry has forecasted reefer trade will continue to expand but, at a low rate of 2.7% a year till 2023, as certain seasonal climate-related factors will result in slow production of output and rising geopolitical risk impacts wider trade growth prospects. But, reefer traffic will expand at a faster pace as its share of trade will rise from 81% in 2018 to 85% by 2023.
Despite of a slowdown in the pace of growth in perishable cargo trade, the additional boost of modal shift is providing container carriers a push to expand in market of reefer cargo. Excluding weak year of 2019:- caused by certain one-off weather-related factors, forecast growth is expected to match that of wider container shipping market with an annual growth of around 4%. Together with tight container equipment availability, it is expected that reefer container freight rates will continue to outperform dry box rates.