Starting from April 1, the shipping company Hapag-Lloyd has increased the freight rates of general and ultra freezer containers from Egypt to Latin America.
In December of 2020, Hapag-Lloyd stopped accepting bookings for 40-foot ultra freezer containers from five Central European countries until the end of the year. And this has not brought any obvious relief. On the contrary, the Chinese authorities’ testing of freezer containers for the COVID has suspended thousands of containers in ports.
The increase in the rate of freezer containers also indicates that shippers of perishable goods will be in greater agony.
As with 20-foot and 40-foot ordinary shipping containers, the decline in port productivity due to Covid-19 measures and subsequent terminal congestion has caused the circulation of containers to slow down, and ultra freezer containers have been also facing a shortage of supply and lagging demand.
Drewry Shipping said that as demand in the freezer industry is growing faster than general commodities, these problems have hit the reefer industry particularly severely.
Shippers around the world are struggling to obtain enough reefers to transport perishable items, and shipping time has been severely interrupted.
Now it takes 45 days or more to transport agricultural products from Chennai to Thailand, while it took only 18 days before the transportation was interrupted. Similarly, the shipping time of seafood from Southeast Asia to Japan has increased significantly. In addition to the shortage of ultra freezer containers, the transit stations also lack usable plugs.
According to data from DIAA (Dairy Industry Association of Australia), Victoria’s dairy exports have been facing a month-long delay, while shippers of North American agricultural products have severely criticized shipping companies, accusing them of shipping empty reefers to China instead of exporting American cargo.
The conditions on the land are not much better. In the United States, trucking company RPM Logistics recently diagnosed that “continuous supply chain disruptions and above-average spot prices are largely frozen goods.” The company advises cargo owners to prepare for the high transportation costs caused by the lack of ultra freezer trailers on the market.
The company believes that the distribution of the Covid-19 vaccine will further weaken the supply of refrigerated trailers for perishable food.
Since the beginning of 2020, the Coronavirus has been raging around the world. From March to April 2020, many countries have entered a state of lockdown. When entering the state of lockdown, the economic activities of the people of these countries are restricted, which also affected those whose workplaces are outside. When the cities were closed, the number of port workers decreased. This leads to a decrease in cargo handling speed. At the same time, some factories were temporarily closed, causing a large number of containers to be stranded in the port.
Due to restrictions on the transportation of goods, the shipping company reduced the number of ships to stabilize costs. If the shipping company continues to dispatch ships without cargo, it will cause losses. Therefore, the shipping company reduced the number of ships that are required to maintain in the sea.
At the same time, container manufacturers are striving to increase production. In the latest “Container Market Outlook” last month, Drewry predicted that the production of ultra-freezer containers will remain at a record level until 2024. Last year, the global reefer container capacity was estimated to have increased by 300,000 teu, roughly the same as the average production in recent years.
The shortage of refrigeration equipment is not new in the industry: in the past few decades, there have been some signs of shortages, the most recent of which was in early 2018. The current predicament is expected to continue to plague the industry for some time. Most forecasts of the availability of super freezer containers believe that at least no improvement will be seen before the end of the year.
Generally speaking, a large number of goods would be sent to North America for Christmas business starting from September. A large amount of cargo is shipped from China to North America, about 900,000 TEU containers are sent from China to North America every month. In addition, China’s National Day holiday could not be ignored, which has led to a large number of shippers trying to ship goods before the holiday. China’s export volume has also greatly increased during the time.
But because shipping companies have reduced the number of ships, Chinese shippers cannot puck up empty containers. In order to solve the problem of shortage of containers, shipping companies are reducing free container use time and detention time. For example, some shipping companies have reduced their free box usage time in Japan from 14 days to 7 days. They set up a system to quickly collect, unload and return containers.
In North America, they pick up the containers at the ports and ship them inland. However, the containers cannot be returned for a long time. The reason for the delay was due to the manpower problems of the consignee. In addition, there is a shortage of drivers, which means that they cannot bring the containers back quickly. Therefore, the chassis for collecting containers from the port is insufficient, and due to these reasons, more ultra freezer containers are parked in the port. It usually takes 1 to 2 days to return the empty container and chassis. However, in the current situation, they may not return for a week.