Reefer spot rates are proving more resilient than dry container prices on exports from North Europe, with slow declines as opposed to dramatic drops. According to the latest market analysis from Oslo-based Xeneta, all main trades from the region have experienced falls over the past three months. However, unlike the dry market, the routes are still commanding higher rates than this point last year, pushing the reefer ‘premium’ over standard containers to new heights.

Standing (relatively) strong

“This reefer spot rate market is clearly not in the same straits as its dry sibling,” comments Emily Stausbøll, Market Analyst, Xeneta. “Although impacted by the same wider macroeconomic and geopolitical factors, demand remains strong enough to ensure that, at least for now, rates seem well positioned to weather the current storm.

“In fact, there’s only one route where reefer rates have fallen by a greater percentage than dry boxes, and that’s North Europe to the US East Coast, where record high volumes and congestion issues have limited standard spot rate declines. Aside from this anomaly, three-month reefer dips are vastly overshadowed by the significant negative developments experienced in the dry market.”

Premium power

The key North Europe to Far East trade proves this point. Here, the average spot rate for a 40’ reefer container has fallen by 4.4% since mid-July, currently sitting at USD 5 230 (18 October). However, the freight rate for dry containers has fallen by some 10.2% in the same period, down to USD 880 per FEU. This means the reefer premium has stretched from USD 3 670 per box to USD 4350.

The largest increase in premiums since mid-July has been witnessed on the trade to Australia and New Zealand, where the gap between the two FEUs has now doubled. A divide that stood at USD 2 050 is now USD 5 450; with reefers currently commanding USD 12 900 per 40’ reefer on the spot market, compared to USD 7 470 per standard FEU. Cold container rates remain a healthy 19% up year-on-year to Oceania, while dry rates have dropped by 15.3% since this time last year.

Intelligence matters

However, as Stausbøll notes, the North Europe to US East Coast trade is an exception, with reefer rates sinking by 20.6% over the last three months, compared to an 8.7% fall for standard FEUs. A different anomaly is delivered on the North Europe to South American East Coast corridor, which is the only sailing where reefer spot rates are cheaper than dry ones. Here, traditionally a backhaul for reefers (with less exports than imports), cold containers currently command USD 3 300 compared to USD 3 500 for a dry FEU.

Despite this disparity, dry spot rates have fallen far faster than reefer rates over the past three months here, slumping by 15% compared to ‘just’ 2.5% for reefers.

“Expect some animated negotiations over spot rates going forwards, for both reefer and dry cargoes,” Stausbøll concludes. “We’ve seen how quickly things can change over recent months, so everybody needs to be on their toes, armed with the very latest data, to get the optimal business value in a very tough, dynamic marketplace.”

Marex Media