One of the steadiest performers in the ocean freight spot market has finally begun to follow the wider industry trend, as rates for reefer containers from North Europe to China lock into a downward trajectory.

According to the latest real-time data from Xeneta, rates on the key corridor have fallen from a long-term average of around USD 5 000 per unit to USD 4 300. The pace of the decline is now accelerating, from edging below USD 5 000 in early October to dropping 11% month-on-month in the first two weeks of December alone.

Under pressure

“After demonstrating singular stability in a rapidly changing pandemic market, the winds of change are clearly blowing for this major reefer trade,” notes Peter Sand, Xeneta’s Chief Analyst.

“We saw spot rates remain largely static for much of 2021 and 2022, hovering around USD 5 000. As rates were falling market-wide, reefers stayed strong, especially on this route, a dry container back-haul.

“However, the combination of weak demand, dropping volumes and a supply chain that is now freeing itself from congestion (with less volumes overall) is applying real downward pressure on prices. Our data suggested this was coming and now, as with the rest of the market, the trend is clear for all to see.”

Declining volumes

Although prices have remained resilient, Sand points out that volumes have actually been declining from Q2 2021. From a stable start in Q1, he notes that demand evaporated for the remainder of the year, eventually resulting in a drop of 19.5% in volumes year-on-year (from 304,000 TEU in 2020). This continued in the early months of 2022, with demand initially collapsing by 36%.

“We now appear to have found a balance,” he adds, “with October ending as the first month of year-on-year volume growth since March 2021. Nevertheless, it wasn’t enough to protect the rates which are adjusting to the now established market and macroeconomic fortunes.”

Everything’s relative

Sand concludes: “But, it’s worth remembering that, relatively speaking, reefer rates on this corridor are still strong. In the pre-pandemic days of 2019, the average unit spot price for a 40” reefer was USD 2 185. That shows current strength, of course, but it also suggests there’s potential for them to fall a great deal more. Time, and the data, will tell.”

Despite the “bumpy ride” experienced on the main China trade, reefer imports from North Europe to North Asia and Southeast Asia have remained robust. After a year-on-year growth in volumes of 8.7% in 2021, another 6.4% has been added across the first ten months of 2022 for North Asia. Southeast Asian import volumes have declined, however, but only by 1.8%.

Agencies

Marex Media