UK meat export costs to rise next year
The recent Drewry's Reefer Shipping Annual Review and Forecast show that prices for refrigerated merchandise will rise further next year, making UK meat exports less competitive in several markets. According to the consultancy firm, this is partly because perishables shippers are competing with higher-paying dry freight at Border Control Posts. While it believes "that these conditions are short term and will self-correct as trade normalizes from mid-2022" it also expects that reefer container equipment availability will remain an issue as the global fleet is not expected to keep pace with rising cargo demand.
“In contrast to dry container freight rates which are expected to decline in 2022 as trade conditions normalize, reefer container freight rates are forecast to continue rising as price inflation feeds into North-South routes when long term contract rates are renewed,” said Drewry’s head of reefer shipping research Philip Gray. “Most reefer cargo on these trades moves on long term contracts.”
The key driver of reefer freight rate inflation has been capacity-related, as perishables shippers have competed with higher-paying dry freight BCOs for scarce containership slots, despite ample reefer plug capacity provision. Meanwhile, continued disruption across container supply chains has led to acute shortages of reefer container equipment, already challenged by the particularly imbalanced nature of reefer trades.
“We believe that these conditions are short-term and will self-correct as trade normalizes from mid-2022,” added Gray. “However, we expect reefer container equipment availability to remain an issue for certain trades during their peak seasons, as the global fleet is not expected to keep pace with rising cargo demand, despite record output of newbuild containers.”
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