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Rates to soar as reefer supply melts.
Reefer rates are set to skyrocket, as the increasing pressures from carrier consolidation collide with acute shortages of reefer containers.
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 (fourth quarter) and Q1 (first quarter), Drewry’s Global Reefer Freight Rate Index increase by $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.
At the same time, the rates for dry vans are maintaining their normal seasonality: falling from Q1 to Q2 and rising again in Q3.
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, as Drewry explains, is a shortage of reefer containers. Drewry’s Reefer Shipping Market Review and Forecast 2017/18 shows that, using 2010 as a base, 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. Shipping lines and leasing companies are not collectively sitting by and letting it happen: there have been a few big orders recently and the reefer box manufacturers are now fully booked for Q4 deliveries.
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