Refrigerated container transport catches up with the market and rates begin to fall
One of the most stable players in the ocean freight spot market has finally started to follow the broader industry trend, as rates for reefer containers from Northern Europe to China follow a downward trajectory. According to Xeneta's latest real-time data, rates on the key route have fallen from an average of around US$5.000 per unit to US$4.300. The pace of the decline is now accelerating, from hovering below $5.000 in early October to falling 11% per month in the first two weeks of December alone.
“After demonstrating unique stability in a rapidly changing pandemic market, the winds of change are clearly blowing for the important reefer container trade,” says Peter Sand, chief analyst at Xeneta, adding that “we note that spot rates remained at largely static for much of 2021 and 2022, hovering around USD$5.000.
According to Sand, “the combination of weak demand, falling volumes and a supply chain that is now becoming uncongested (with lower volumes overall) is putting real downward pressure on prices. Our data suggested this was looming and now, as with the rest of the market, the trend is clear for all to see.”
declining volumes
Although rates have remained resilient, Sand notes that volumes have actually declined since the second quarter of 2021. From a steady start to the first quarter, he notes that demand evaporated for the remainder of the year, ultimately resulting in a 19,5% drop in year-on-year volumes (from 304.000 TEU sen 2020). This continued into the first months of 2022, with an initial collapse in demand of 36%.
“It looks like we have now found a balance,” he adds, “with the October close being the first month of year-on-year volume growth since March 2021. However, it was not enough to protect rates adjusting with macroeconomic fortunes. and market now established”.
Everything is relative
The analyst concludes by noting that “it is worth remembering that, in relative terms, refrigerated container transport rates on this route (China north of Europe) remain solid. In the days before the 2019 pandemic, the average unit spot price for a 40-foot reefer container was $2.185. That shows the current strength of course, but it also suggests that there is a chance that they could go much lower. Time and data will tell."
Despite the “bumpy ride” experienced on China's main route, reefer container imports from Northern Europe to North and Southeast Asia have remained strong. After a year-on-year growth in volumes of 8,7% in 2021, another 6,4% was added during the first ten months of 2022 for North Asia. However, Southeast Asian import volumes have decreased, but only by 1,8%
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