zoomImage Courtesy: Siem Shipping

Reefer rates are set to skyrocket, as the increasing pressures from carrier consolidation collide with acute shortages of reefer containers, according to shipping consultancy Drewry.

With half of the planned M&A activity among container carriers still to come into effect, and the typical reefer season cooling down after its peak in Q4 and Q1, Drewry’s Global Reefer Freight Rate Index increased by USD 52 or about 2% from Q1 to Q2. Based on the preliminary data for Q3, the index will rise further as the slack season continues.

Hence, the argument could be made that carrier consolidation by itself is not responsible for the rise in reefer rates, and that there has to be another factor. That other factor is a shortage of reefer containers, according to Drewry.

“The need for greater transparency in reefer shipping pricing is growing as shippers face mounting cost pressures due to equipment shortages,” the shipping consultancy said.

Using 2010 as a base, Drewry informed that 2016 is the first year where demand had outgrown supply. The number of reefer boxes joining the fleet was very low in 2016, at around 60% of its historical average for the last decade. And it will be low again in 2017.

“All of this is putting many reefer shippers in a particularly unpleasant spot: due to the perishability of their cargo, they are extremely sensitive to supply side disruptions. And they have seen plenty of those of late,” Drewry said.