After a tepid recovery in the first quarter of the year, reefer freight rates on most trade routes have been decreasing. Drewry’s Global Reefer Freight Rate Index (which is based on freight rates for a wide range of port pairs) is expected to decrease further in the third quarter, in contrast with dry box freight rates, which have seen a strong recovery since the start of the Res Sea crisis, reports Drewry.
Reefer Freight Rates
The reefer sector’s struggles are not new. In 2023, the tonnage of reefer cargo on routes involving the Red Sea dropped by more than 5% year-on-year, with the most significant decline occurring in the first three quarters—well before the region was affected by drone and missile attacks at the Bab-el-Mandeb. This decline was mirrored in the broader market, with global seaborne reefer trade decreasing by 0.7% year-on-year, following a 1.5% decline in 2022.
The recent multi-year weakness in seaborne reefer trade is a stark contrast to the strong growth observed in the 2010s, leading to questions about the future trajectory of the reefer market. While model-based forecasts offer some guidance, the low volumes of many commodities shipped in refrigerated containers or cargo holds mean that a single unforeseen weather or geopolitical event can significantly disrupt predictions, even when long-term phenomena like El Niño and La Niña are considered. As the forecast period extends, so does the uncertainty.
An example from Drewry’s recent Reefer Shipping Annual Review and Forecast highlights this uncertainty. Exotic fruits, the commodity group with the strongest seaborne trade growth in 2023, are projected to continue growing positively each year. However, applying average historical year-on-year growth rates from 2000 to 2023 to each forecasted year shows how a single unexpected year can significantly impact the entire forecast period, either positively or negatively. This illustrates the inherent unpredictability in forecasting the reefer market’s future.
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Source: Drewry
