The forecast for refrigerated container shipments for the foreseeable future calls for more of the same—tight capacity and equipment shortages compounded by high rates.
It’s a sobering outlook for perishables shippers who hoped to see an easing of port congestion, carrier service issues, problems securing equipment and capacity, and rising freight rates, which have burdened the sector since late last year.
Philip Gray, head of reefer shipping research at London-based Drewry, stated last week that, “Tight container equipment availability and a shortage of slot capacity have been key drivers in forcing up freight rates, as a recovering reefer trade has struggled to compete for space with higher paying dry cargo traffic.” Furthermore, “Despite record levels of reefer container production in 1Q21, Drewry expects equipment availability to remain tight over the next few years.”
The situation is so dire that some perishables shippers, particularly food, are turning to specialized reefer ships to move their goods. It’s a remarkable development considering shippers have steadily migrated their perishables shipments to containerized carriers over the years.
According to the research firm, “Container supply chain disruption has greatly increased demand for specialised reefer ships, driving time charter equivalents above the 100 cents/cft/30 days threshold, representing the strongest period of trading in a decade. Indeed, trade for these vessels is so buoyant that Drewry expects the fleet to expand this year, breaking a 20-year declining run, though contraction is anticipated to continue thereafter.”
It’s unlikely that ocean freight rates will relax anytime soon considering carriers’ attempts to raise rates in recent years have been unsuccessful, while the dramatic upturn in trade over the last 9 months is favorable development for carriers, to say the least.
If you’re a wine importer or exporter that uses a 3PL or freight forwarder, make sure to stay in close communication and continually evaluate your supply chain. For example, are there alternative trade lanes, services, carriers, modes of transport, etc. that provide good options for your program?
Make sure to provide accurate and timely information to your logistics providers, too. This may require going upstream in your supply chain to assure that you are getting notifications and information as soon as it’s available in order to respond quickly.
Indeed, one of the perpetual complaints from ocean carriers and logistics providers is receiving late or inaccurate forecasts from their shipper customers. So keep the communication channels open, particularly in this volatile environment.