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Softer reefer rates still offer a healthy option

Seatrade Seatrade_Reefer_Management.jpg
Mainhaul rates both for reefer containers are easing but remain significantly higher than long-term averages.

Containerised cargo is taking a larger slice of volumes but conventional reefers still provide vital links in secondary trades.

Softer rates for reefer containers on the key route from North Europe to China over recent months have dipped sharply this month, according to Oslo-based Xeneta, a shipping and air freight market analyst. Although remaining high compared with long-term averages, the firm estimates that rates on the route have fallen from just below $5,000 per FEU early in October to around $4,300 today. However, this compares with typical pre-pandemic rates of less than $2,200.

Commenting on the figures, Xeneta’s Chief Analyst, Peter Sand, said: “We saw spot rates remain largely static for much of 2021 and 2022, hovering around $5,000. As rates were falling market-wide, reefers stayed strong, especially on this route, a dry container backhaul. However, the combination of weak demand, dropping volumes, and a supply chain that is now freeing itself from congestion (with less volumes overall) is applying real downward pressure on prices.”

Despite the downturn in reefer trade to China, however, volumes into North Asia remain strong, according to Xeneta data. Following growth of 8.7% in 2021, volumes grew by a further 6.4% in the first ten months of this year. Volumes to Southeast Asia have eased slightly over the same period, down by 1.8%.

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Meanwhile, rates in the specialised reefer sector remain at spectacular levels. During last year’s ‘peak season’, which corresponds to winter in the northern hemisphere, large specialised reefer vessels were typically earning 180 cents per cubic foot per month, about three times more than long-term averages. The specialised sector, which operates entirely separately from the containerised trades, benefited from a shortage of equipment in the boxed market, as well as widespread container terminal congestion. 

Despite the fact that specialised reefer vessels now account for only about 10% of total reefer cargo movements, the sector is still viewed as an essential component of the trade in perishables. But there are very few specialised vessels on order, and the fleet has a high age profile.

Antwerp-based Seatrade Reefer Chartering is a specialised reefer operator, focusing on a number of key refrigerated cargo trades. Earlier this year, the company announced an order for four 1,800TEU container ships equipped with high reefer capacity of around 1,200TEU. The vessels, which will be deployed in the company’s Fast, Direct & Dedicated (FDD) services between smaller ports in key regions, are under construction at Huanghai Shipyard in China and are scheduled for delivery from October 2023.

Announcing the order in a statement at the time, the company said: “Transit times and associated indirect costs are increasing on services operated by large container lines, and there remains a clear demand for FDD services operated by specialist reefers, specialised container vessels, and hybrid vessels.”