The outlook for seaborne reefer trade has weakened in the final quarter of the year with cargo demand now expected to post a second consecutive year of decline.
“Transit restrictions on the drought-stricken Panama Canal are starting to impact vessel capacity serving exports of perishables out of the West Coast of South America,” says the latest update from Drewry.
A number of factors like climate impacts on key fruit crops, weak Chinese demand and geopolitical tensions have dampened the short-term outlook with total seaborne reefer cargoes for 2023 forecast to decline -0.5 percent YoY, according to Drewry’s Reefer Shipping Forecaster report published recently. “This will follow last year’s contraction of 0.8 percent and will represent two consecutive years of declining trade.”
Meat remained the largest commodity by volume in Q32023, the report added. “Despite strong pork exports from the U.S. and Brazil so far this year, this segment has been slowed by declines in beef exports and continued weak demand from China. In the fish and seafood sector, demand has also waned as marine heat waves in the Atlantic have added risks for piscine ecosystems and catches have been consistently low in the year to date.”
There has been a noticeable trend of reduced exports across fruits from almost all major producing regions as El Niño effects have amplified weather events, Drewry says in its update. “Scarcity of quality produce has driven declines in deciduous, exotics, and melons and berries exports. The banana trade has also faced difficult operating conditions with increasing cost pressures and weak demand resulting in flatlining seaborne exports this year.”
The biggest wild card now, according to Drewry, is the situation with the Panama Canal with transits and drafts heavily reducing due to the lack of rain which was the lowest in October since 1950. Transit slots now stand at 24 per day and will go down gradually to 18 by February 1, 2024. “Cargo owners should prepare for Panama Canal surcharges from container shipping lines and will need to check if their preferred shipping line has guaranteed slots before committing.”
Seaborne reefer trade is forecast to return to growth next year and beyond as global population growth fuels long-term demand, expanding at an average annual rate of 3.2 percent over the years to 2027.