Reefer exports become more critical
The hope for a normalization in sea freight has burst. Shipments of refrigerated containers destined for Russia were stopped in transit. Ports like Rotterdam, Hamburg and Bremerhaven are closing in. The already chaotic conditions in the transport chains are getting worse.
The major problems are in sea freight exports via Hamburg. Storage space and power connections in all terminals on the Elbe are so scarce that export containers are sometimes only let in 48 hours before the ship arrives. However, since ships are constantly being delayed or individual calls are canceled entirely, the tight time windows are constantly being pushed back.
This resulted in immense additional costs. For shipments to temperature sensible goods like Latin America, that means 15 to 20 percent on top of the freight bill. But the refrigerated containers were not the main problem themself. Rather, several terminals in Europe would have accepted so many dry containers that the boxes also took up valuable parking spaces with power connections that are actually intended for reefers.
A similar situation currently can be found in North America too, where bottlenecks in the ports and in intermodal transport mean that incoming container ships with perishable goods sometimes have to wait weeks at the roadstead. This led to massive damage to goods in fruit imports. Large shipments spoiled or missed seasonal windows for marketing, causing still salable goods to suffer a huge loss in value.
Deliveries of up to 1.5 million boxes of bananas (each weighing 18 kilograms) from Ecuador have failed since the outbreak of war, reported by market research companies. There is virtually no margin left for the producers if the goods are sold at the usual prices in the supermarket. Till April only two shipping companies had accepted cargo from Ecuador for Russia, carrier MSC and the reefer ship operator Cool Carriers – but as the war continue, they’re forced to stop…
According to the industry, it is not yet clear which new trade flows and traffic will develop out of necessity. The delivery failures could also trigger chain reactions that also affect exporters in completely different product segments. There could be problems, for example, for the meat industry in Scandinavia, which got most of its empty refrigerated containers for export all over the world delivered from St. Petersburg.
The limits are already reached!
There is speculation in parts of the industry as to whether the loss of business in Russia could lead to a decline in global traffic and thus to a relief in ship and container capacities. The freight rates have not yet revealed this. According to benchmarking platforms, short-term rates for shipments from northern Europe to the Far East have even increased in recent weeks, to an average of $5,335/FEU reefer.
On the major fruit racetracks in South America and Central America, transport prices are far higher and long-term contracts have been concluded at almost 50 percent higher rates. Base freight is likely to continue to climb due to the rising fuel surcharges, even if many exporters are at their breaking point.