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The reefer container market remains strong for the first quarter of the year, according to DHL’s Global Forwarding’s latest Ocean Reefer Market Update
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Geopolitical tensions alongside unpredictable weather have made operations more complex than usual
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The first quarter peak fruit season for exports such as citrus, grapes, and berries, continues to drive high reefer demand
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Reefer freight rates will remain elevated for the near term due to capacity constraints and rising operational costs
The reefer container market for the first quarter of this year “remains strong, driven by fresh produce, pharmaceuticals and frozen goods despite regional slowdowns and disruptions from Cape of Good Hope diversions,” according to DHL Global Forwarding’s latest Ocean Reefer Market Update.
Making operations more complex than usual are the continued geopolitical tensions resulting in instability in the Red Sea region which disrupt shipping between Asia and Europe, adding costs and delays. Storms and droughts have also affected crop yields and export timelines for perishable goods.
Reefer freight rates will remain elevated for the near term due to capacity constraints and rising operational costs, the update said.
For the rest of this year, freight rates are not seen to return to pre-pandemic levels due to continuing high costs and demand-supply imbalances.
The first quarter peak fruit season for exports such as citrus, grapes, and berries, continues to drive high reefer demand, especially from South America and South Africa.
And while the labor dispute in ports in the US East and Gulf Coast has been called off, uncertainties remain over US tariffs, impacting global trade flows.
According to DHL, “tight capacity, rate fluctuations, and shifting trade patterns are defining the current market landscape.”
It must be noted that last year, realignments among shipping alliances caused short-term reliability issues.
On the plus side, the citrus season from EG has witnessed a 15% growth over the last year, while such key commodities as meat, bananas, and fish are recovering after two years of declines.
The ocean freight market outlook for this first quarter has its own issues, which is why demand growth is “cautiously optimistic.”
Some markets are showing signs of recovery while others remain under pressure due to economic and geopolitical factors.
The US market, for one, faces uncertainties due to potential shifts in trade policies, what with anticipated higher tariffs affecting China, Canada, and Mexico.
For Asia, slower-than-expected recovery is forecast, while for Europe, inflationary pressures continue to influence demand.
In related news, stricter environmental regulations such as IMO 2023/2024 GHG measures continue to drive up operational costs.
