Refrigerated cargoes expected to continue growth into 2022

The COVID-19 pandemic, and its consequent supply-chain congestion, may have caught up with the refrigerated cargo business—but less so compared to other cargo categories. Global supply chains are now clogged with all kinds of cargo—from furniture and exercise equipment to appliances and apparel—as well as the fruits, vegetables, meats, and seafood that transit in refrigerated containers. But reefers appear to be faring better than other cargo categories.

The refrigerated container business has been growing strongly in recent years. Increased demand for year-round availability of a variety of refrigerated consumables has consistently been filling those boxes. The reefer business has also benefitted from a shift from bulk refrigerated ships to containers (although the current congestion has breathed some life, probably short-lived, into the bulk refrigerated segment.) That’s why companies like SeaCube Container, a lessor of containers and equipment, has increasingly emphasized the reefer side of its business in recent years reports

In the early days of the pandemic, volumes of many cargo categories plummeted, but demand for perishables suffered less, and then rebounded nicely, as more people ate at home and sought more fresh foods. The analysts at Drewry found that the ocean perishables trade in 2020 declined by 0.4%, but that reefer volumes advanced 0.3% to 5.4 million TEU.

Later, demand for all sorts of goods spiked, as people started spending on home improvements and home offices, among other things, while refrigerated cargoes proceeded apace. During the first half of 2021, seaborne reefer traffic expanded by 4.8% year over year, led by higher volumes in the meat, citrus, and exotics trades, according to Drewry. Now, reefer operators and cargo owners have to contend with the clogging of the supply chain, but maybe not as much as those involved in other categories of cargo.

Reefer Priority
“Reefers always receive prioritized stowing,” explained Greg Tuthill, senior vice president and chief commercial officer of the Woodcliff, New Jersey-based SeaCube. “We haven’t seen as much delay as they have in the dry cargo segment but we are not immune to congestion either.”

While refrigerated cargoes may do better than others making it through container terminals, “We still face the same challenges getting cargo through the network,” said Tuthill. “Labor and network space constraints” are proving to be the business’s biggest headaches right now, he said.

Some of those same trends are reflected in results reported for the second quarter of 2021 by Fresh Del Monte Produce, which saw its gross profit of $110.0 million increase by 40% and its 9.6% profit margin increase by 33.3%. In North America, the company reported increased sales and profits for pineapples and melons and in its fresh-cut fruit, fresh-cut vegetable, and prepared food product lines. All this, despite being faced with higher fuel, inland freight, packaging, production, and procurement costs, and “unprecedented disruptions in global supply chains and shortages of labor,” said Mohammad Abu-Ghazaleh.

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