The recent rise in reefer shipping rates is expected to prove short lived, as the trade adjusts to the rerouting of vessels and excess containership capacity is deployed to support longer transit times. While the subsequent re-routing of cargoes continues to add some delays and complexity in repositioning reefer equipment, this is not expected to have a long-term effect on freight rates.
Rerouting cargos
Ongoing violence in the Red Sea continues to cause shipping lines to reroute cargoes via the Cape of Good Hope, while record low water levels in the Panama Canal are simultaneously driving delays there.
Trade volumes unaffected
Trade volumes have been largely unaffected by the disruption, with volumes for the fourth quarter estimated to have risen by 3.2% YoY. Ongoing weakness in the Chinese economy contributed to weaker-than-expected demand for key protein shipments in 2023, but the trade posted a return to growth in the second half of the year, boosted by high beef exports from Brazil and Australia. The arrival of El Nino in 2023 continues to impact fruit crops around the world, as the increasing unpredictability of weather systems has dented production. For instance, trade in bananas was down by 1.3% YoY last year.
Volumes on nearly all major reefer intensive trade routes fell last year as an expected uptick in cargo demand failed to materialise. Deflationary pressure in China meant that key North America to Asia and North Europe to Asia volumes slid further in the final quarter. Meanwhile, trades to and from Europe continue to evaluate the impact of ETS costs on competitivity, as the next milestone will require companies to submit allowances for 70% of verified emissions next year, rising to 100% in 2026, depending on vessel size.
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Source : Drewry
