Shifting Dynamics in Global Reefer Trades

The global supply chain has shifted due to conflicts in the Red Sea and unrest in the Middle East, affecting trade routes and freight rates.

Impact on Refrigerated Cargo (Reefer) Exports from Europe:

The export of reefer containers from North Europe, especially to the Persian Gulf and Southeast Asia, is undergoing significant changes.

North Europe to Persian Gulf:

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Freight Rate Increase

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  - Since late 2023, the average long-term contract rate for a 40ft Reefer High Cube (RH) from North Europe to the Persian Gulf has increased by 58%, reaching USD 3570 by mid-September 2024.
  - Rates jumped by USD 950 at the start of 2024 due to disruptions in transit through the Bab el-Mandeb Strait.

Route Changes 

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  - Many shipping lines diverted vessels away from the Persian Gulf to avoid conflict zones, rerouting them around the Cape of Good Hope.
  - This led to missed port calls in the Persian Gulf and a subsequent reduction in capacity, pushing freight rates higher.

North Europe to Southeast Asia

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Comparative Trade Rates

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  - At the end of 2023, the rate difference between the Persian Gulf and Southeast Asia trades was just USD 64. By September 2024, this gap widened to USD 959.
  - Unlike the Persian Gulf route, the Southeast Asia trade was unaffected by route changes, resulting in more stable rates.

Stable Market:

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  - The Southeast Asia trade settled into a “new normal” with rates ranging between USD 2,250 and USD 3,000 throughout 2024.

Demand Changes
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Trade Volumes
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  - The reefer trade from North Europe to the Middle East is 40% larger in volume than the Southeast Asia route.
  - However, in the first seven months of 2024, volumes to the Middle East decreased by 2.5%, while volumes to Southeast Asia increased by 6.8%.

Global Reefer Market Outlook:
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Increased Demand
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  - Global demand for reefer container transport is at an all-time high, up 5.1% in the first seven months of 2024 compared to the same period in 2023.

Future Expectations
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  - As we move toward the traditional peak season in Q4, rates for the Persian Gulf may continue to rise due to capacity issues, while the Southeast Asia trade is better positioned to handle increased seasonal demand.

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