Reefer container freight rates to outpace dry box pricing: Drewry

2022-08-18 13:24:45 Trade Body / Associations News

Reefer container freight rates across global trades rose over 50% in the year to Q2, matching gains made in dry cargo pricing, and are estimated to increase further in Q3, outpacing dry box rates, according to a new report from British consultancy Drewry.

Drewry warns 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, rose 50.4% year-on year in Q2 and the Q3 reading is expected to climb further, though the pace of growth will slow. However, 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.

The reefer supply chain is at a precarious moment

“The reefer supply chain is at a precarious moment with extremely high input costs for materials such as fertilizer, packaging and energy, to name just a few. Freight rates remain unsustainably high and many BCOs, particularly those moving low value products, are shipping less as they are priced out of the market”, said Drewry’s head of reefer shipping research Philip Gray.

 “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.”

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

“Despite fears of a global slowdown in trade, supply chain disruption is expected to remain a feature well into 2023,” added Gray.

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