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Strong Southern Hemisphere harvests drive reefer shipping growth

After a tumultuous year in 2023, the reefer sector has started 2024 on a stronger footing as healthy crops in the Southern Hemisphere have helped to lift growth. This trend is set to continue across 2024 as a whole, with a return to growth forecast for the sector after two years of declines, according to Drewry’s latest Reefer Shipping Forecaster.

Good growing seasons have supported improved deciduous exports so far this year, and South Africa’s citrus season is likely to deliver further growth with new orchards coming into production, and good growing conditions expected to benefit orange, lemon and grapefruit exports. Similarly, in New Zealand, although a slow start for kiwis this year, it is expected to develop into a good crop later, with export volumes substantially up from last year’s disappointing performance. The major seaborne reefer commodity trade of meat and bananas also started the year with positive momentum, posting single digit growth year-on-year (YoY).

Stronger exports of key commodities are reinforced by falling reefer freight rates as shipping lines continue to adjust prices down after pandemic era disruptions. Having risen slightly in 1Q24 due to the risk of the Middle Eastern conflict, average reefer rates are now expected to continue falling as excess capacity in the container segment compensates for any rerouting needed around the Red Sea.

Similarly, container shipping has proven resilient amidst the persistent challenges posed by delays and backlogs at the Panama Canal. Long-term deals signed by container shipping lines have secured priority for many shipments, with the larger operators in particular able to obtain priority and maintain schedules. Improved rainfall in the Central American state has also helped bolster the outlook this quarter but water levels still remain well below average historical levels, pointing to further impacts on schedules for some time to come.

Building on the momentum seen in the first few months of the year, Drewry expects improvements in exports and a continued decline in reefer freight rates to shape the outlook this year, with overall worldwide seaborne reefer volumes set to increase by more than 1% YoY in 2024.
Source: Drewry

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