The reefer trade is set to make a comeback in 2023, with an estimated volume growth of 2.1%. This surpasses the growth rate of dry cargo trade and is projected to reach 140.5 million tonnes this year. According to Drewry's Reefer Shipping Forecaster, reefer shipping is expected to outperform other cargo types due to the resilience of the perishables trade during economic downturns.
After facing challenges in 2022, including trade stagnation, the outlook for the reefer sector is now more favorable. Easing disruptions in the supply chain and increasing cargo demand are contributing to the expected volume growth. In the first quarter of 2023, all reefer-intensive trade routes experienced year-on-year growth for the first time since Drewry began analyzing the trade in 2016, with total seaborne reefer trade expanding by 2.7%.
Asia's increased demand, driven by the reopening of the Chinese economy, played a crucial role in the first quarter's growth. Meat and fish shipments, among the largest-volume commodities, have shown promising growth, with meat expected to recover from last year's contraction and achieve a growth rate of 2.4% in 2023. However, banana shipments continue to face challenges due to rising costs.
The recovery in the meat trade is expected to drive growth on the North America-Asia and North Europe-Asia trade routes, with the former anticipated to have the highest annualized growth of 4.6% over the next five years.
China's reopening economy continues to positively impact the growth outlook for 2023. However, there is a sense of caution due to potential threats of recession, high inflation, and the anticipated arrival of El Niño, which is already disrupting fruit production in the Pacific and Americas, posing significant downside risks.
In the short term, improvements in supply chains are expected to continue as the cost of repositioning empty reefer containers decreases, leading to increased supply. The reefer container equipment fleet is also projected to expand, following a decline in reefer box manufacturing in recent quarters, with an average annual growth rate of 3.7% forecasted over the next four years.
Container availability has been a significant challenge recently, contributing to record-high freight rates in the reefer industry last year. However, with repositioning costs decreasing, freight rates have experienced a sharp decline of 17% year-on-year in the second quarter of 2023, according to Drewry's estimates. Nevertheless, the decline in reefer rates has been less pronounced compared to dry containers, and Drewry predicts that reefer rates will continue to outperform dry container rates.
The positive outlook for the reefer shipping trade is supported by the expected global cargo demand expansion of 3.3% on average annually over the next five years, aligning with pre-pandemic trends. Meanwhile, container carriers will experience even higher growth of 4% per year as the share of specialized reefer vessels in the trade continues to decline.