In recent months, there have been significant changes in the reefer market. These developments, which range from increased rates of tender rejection to difficulties in obtaining containers, show a tightening environment that affects both shippers and carriers. Here’s what you need to know about the reefer market’s current situation and what to anticipate in the upcoming months.
Increasing Rejection Rates for Tenders
One important measure of market conditions is the percentage of tenders that are rejected. There is a mismatch between supply and demand when carriers refuse to cover contracted cargo. Reefer shipment rejection rates have recently increased to levels not seen in many years, a considerable increase over last year. This implies that carriers are facing capacity issues and that there is a greater demand for refrigerated transportation services than there is supply.
Due to the lower amount of refrigerated shipments, reefer tender rejection rates have historically been more erratic than those in the dry van market. These variations are further exacerbated by seasonal considerations, such as the “protect-from-freeze” season during the winter months. The need for reefer capacity will persist throughout the winter as long as temperatures remain steady to keep items from freezing.
Differences in Capacity by Region
The reefer market is significantly shaped by regional dynamics. Areas such as the Midwest, which handle a significant amount of reefer freight, have historically had a greater impact on national averages than have smaller-volume regions like the Northwest. Rejection rates have increased in several regions in recent months, suggesting a widespread tightening of capacity as opposed to isolated disruptions.
The Spot Market Is Still Mostly Consistent
The spot market has not yet seen steady upward pressure on rates, despite the fact that tender rejection rates are increasing. This implies that instead of using spot market sourcing, shippers are still depending on their contractual carrier networks. However, the spot market may see more activity if capacity becomes even more constrained, particularly in the event of unfavorable weather conditions or supply chain interruptions.
Difficulties with Equipment Availability
Concerns about the supply of refrigerated containers for international shipments are developing in addition to trucks. Reefer container supplies are under pressure due to an increase in imports, especially of temperature-sensitive items like seafood. Shippers find it challenging to obtain the equipment required to transfer products effectively due to port congestion and the possibility of labor strikes.
Exporters report difficulties locating empty containers and the required generator equipment at major East and Gulf Coast ports, where the issue is especially noticeable. These logistical challenges show how difficult it is to manage reefer freight in a limited space, even though some respite is anticipated as equipment is moved from Asia.
Prospects for the Winter and Beyond
The way the reefer market develops as winter draws on will be greatly influenced by the weather. While extended supply chain interruptions may make preexisting problems worse, cold snaps can swiftly raise demand for chilled capacity to prevent freezing. This emphasizes how crucial it is for shippers to prepare ahead and take advantage of solid carrier partnerships.
With demand still exceeding supply, the reefer market is predicted to stay tight in the future. In the long run, nevertheless, there might be some respite due to seasonal changes and slow improvements in equipment availability.
Always feel free to reach out to our team if you need help planning your reefer freight solutions, or just have questions about your logistics process that you would like answered!
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