Demand for reefer equipment has been caused by a substantial demand increase in China where production for certain foods has crashed, causing a 40% growth in demand and a shortage of reefer equipment in the deficit regions for reefer boxes.
Speaking at the Cool Logistics virtual conference, Thomas Eskesen, the founder of Eskesen Advisory, based in Denmark, said that a failure in pork production in China had seen demand there for the meat shoot up to 80 million tonnes, with demand overall increasing 40% this year and including increased demand for poultry and beef.
“China is the big story in the reefer trade,” said Eskesen, adding that the country has sought imports from Brazil, the United States and Spain, “These are all long haul routes so equipment has been tied up for longer due to the longer transit times.”
He went on to say that the reefer boxes have been moving from so-called reefer deficit regions to reefer surplus areas. “It is the worst nightmare for equipment planners,” highlighted Eskesen.
The greater levels of demand could last from one to three years according to the Cool Logistics panel which included Maersk’s reefer expert Bruce Marshall, Frank Ganse from Broom Logistics and Philip Gray from Drewry Shipping Consultants.
Marshall pointed out that the reduction in services in key regions due to the pandemic had meant that the usual network used for repositioning equipment was “simply not there.”
As a result the carriers were forced to put on extra loaders at great cost to shift empty containers to the deficit regions. However, as the pandemic spread across the globe the carriers experienced other significant hurdles including the increased waiting times to get into ports, due to a reduction in staff and productivity. While some ports were restricting access to ships with an infected crew member and other facilities had insisted on a two-week time lapse between port calls.
“Then there was the problem of pre-trip inspections to get boxes ready for their next shipments became a challenge, depots had a lack of staff and the landside transportation also saw problems with staffing particularly from farm to terminal, where customs officer shortages and local authorities staffing shortages saw further disruption,” explained Marshall.
According to Drewry Shipping Consultant’s Philip Gray, growth in the reefer sector is running at around 3.7% per year, well ahead of the dry container sector which is expanding a 2.2% annually, though from a larger base.
Growth in the reefer market has kept up with the net growth in container equipment, which has seen 290,000TEU, around 150,000 new boxes, delivered this year, but Eskesen points out that the longer journeys and the increased dwell times at ports and depots means the actual capacity has contracted, rather than increased.
Combined these industry challenges have meant that some rates, for some commodities, from Europe to Asia have been up to US$8,000/FEU, according to Broom Logistics Frank Ganse. And a similar story is seen on the Asia to Latin America west coast trades, which has seen a tripling of rates in a month, and prices on this trade are currently seeing the greatest rate increases of any trade, including the buoyant Asia to US West Coast services, as reported in Container News today.