Navigating Challenges and Opportunities in the Reefer Container Market for 2025
As demand for refrigerated (reefer) containers rises and market growth is anticipated, the reefer container sector is set to become more competitive by 2025. However, potential operational disruptions due to ongoing labor negotiations at ports could significantly affect time-sensitive reefers. Additionally, longer transit times around Africa are stressing equipment availability even further.
Recap of 2024:
In 2024, the reefer market saw some upward momentum as global trends intensified pressures on the cold chain. Analysts observed a notable increase in demand for reefer cargo, particularly for agricultural exports from South America. According to PIERS, a product of S&P Global’s Journal of Commerce, US reefer imports from South America surged by 11.8% year-over-year in the first three quarters of 2024, with a remarkable 17.6% rise in August. This demand for fresh cargo was further bolstered by growth in the pharmaceutical and chemicals sectors.
The diversion of vessels from the Red Sea has led to increased transit times, causing a bottleneck in the availability of reefer equipment. Concerns over potential labor strikes at US East and Gulf coast ports prompted some shippers to alter their shipping strategies, considering alternative solutions for time-sensitive cargo ahead of the initial negotiation deadline on October 1. A brief strike by the International Longshoremen’s Association (ILA) created slight disruptions in equipment availability due to cargo delays. Additionally, severe weather in Asia, including multiple typhoons, adversely affected vessel operations.
Looking Ahead:
Reefer shippers utilizing US East and Gulf coast ports will be closely monitoring the upcoming ILA strike deadline on January 15, as delays pose a significant risk for perishable cargo. Another critical concern is the potential imposition of extensive tariffs proposed by US President-elect Donald Trump. If implemented, these tariffs could alter sourcing patterns for dry goods, though reefer shippers might face the dilemma of absorbing higher costs or passing them on to customers. Unpredictable weather patterns are always a consideration in reefer trade; shifting harvest timelines could further challenge equipment availability in 2025. Nevertheless, analysts predict that the market will largely stabilize in the coming year, with equipment availability improving as South American beef exports decrease.
Future Considerations:
Like in the dry container sector, a significant uncertainty for reefer shippers remains when the Red Sea will be deemed safe enough for carriers to resume transit through the Suez Canal. Currently, extended routes around southern Africa are monopolizing both reefer equipment and vessel capacity. A return to Suez Canal shipping would quickly alleviate these pressures, potentially leading to lower rates in the market.
