Reefer Shipping is Outpacing Dry Cargo and Growing Container Trade

Reefer container traffic is growing quickly (file photo)

Published Aug 25, 2020 5:56 PM by The Maritime Executive

Based on the resilience of the food supply chain and the import/export trade in key food stuffs, reefer shipping is expected to outpace the broader dry cargo trade according to the maritime research and consulting firm Drewry. In its latest Reefer Shipping Annual Review and Forecast 2020/21 report Drewry expects that reefer shipping will be able to withstand the current economic pressures, but notes that they expect a tightening in the availability of refrigerated container equipment.

Drewry forecasts that seaborne reefer traffic will reach 156 million tons by 2024, representing average annual expansion of 3.7 percent, which is faster than the anticipated growth in the wider dry cargo trade. They note that this growth will come despite a slowing in the growth in seaborne perishable cargo in 2019.

Worldwide seaborne reefer trade recorded growth of just 1.7 percent in 2019 to 130.5 million tons according to Drewry, its weakest rate of growth since 2015. Traffic growth they reported was held back by lower shipments of both deciduous and citrus fruits due to extreme weather conditions in Europe and drought in South Africa and Chile. The declines in fruit shipments, however, was offset by strong increases in pork shipments to China following the outbreak of African swine fever.

“Drewry expects the reefer trade to be more recession proof against the economic impacts of COVID-19,” said Drewry’s head of reefer shipping research Philip Gray. “And near term, it will continue to benefit from African swine fever induced protein demand into Asia. The continuing trade standoff between the US and China remains a threat to transpacific trade, but could provide opportunities on other routes through trade substitution, such as East Coast South America to Asia.”

Drewry also highlights an umber of key shifts taking place in the shipments of reefer cargoes. Key among them is the shift to fully cellular containerships as the supply of specialized reefer vessels continues to decline. Bananas and fish are the biggest commodities carried in specialized reefer ships and their largest trade route is West Coast of South America, due to Ecuador prominence in growing bananas, with the ships sailing the historically banana trade routes to Europe.

Due to an aging fleet of reefer vessels and limited investments in new specialized reefer vessels, Drewry projects a continued decline for these vessels. In 2019, specialized reefer vessels carried just 13 percent of the trade and according to Drewry it will further decline to just 8 percent by 2024. 

Strong trade growth and modal shift Drewry however points out is continuing to growth in reefer container cargo volumes outpacing the wider container shipping market. They estimate that worldwide containers ship volume of reefer cargo grew by 3.4 percent in 2019 to 5.3 million feu. In its report, Drewry is forecasting average annual containerized reefer growth approaching 5 percent in the period to 2024.  It is expected to far outstrip that of dry the container trade.
“However, availability of refrigerated shipping container equipment remains a challenge, due to the highly imbalanced nature of reefer trade routes,” added Gray. “And Drewry expects conditions to tighten as equipment fleet growth is not expected to keep pace with projected cargo demand.”
Based on analysis of the top 15 reefer trade routes covered in the report, Drewry estimates that global deep sea reefer trades are 82 percent imbalanced, with major exporting regions such as South and Central America, Oceania and Southern Africa limited by particularly high negative imbalance ratios.