Navigating the Changing Waters of Shipping via Reefer Containers

While some of our clients have reported improvements in their business for 2021, others are clearly happy the year is over. So, as we begin to navigate through 2022, what’s likely ahead for clients who use “reefer containers” to transport their goods?

First, though, a bit about the terminology for those who don’t deal with this element of our shipping industry day-to-day. So, what exactly is a reefer storage container? In nautical use, a “reefer” is a person who “reefs” such as a midshipman or a commercial fisherman. But in the world of logistics, reefer storage containers are those equipped with a refrigeration device to create the proper temperature, humidity, and atmosphere for perishable goods.

Reefer storage containers can safely transport fresh fish, seafood, meat, vegetables, dairy products, frozen food, flowers, pharmaceuticals, and other perishables. They’re placed on reefer cargo ships, which continue the goods’ comfortable, temperature-controlled journey across oceans and between continents.

Trends in 2022 and Beyond

So, examining that “reefer storage container marketplace,” here are trends that Prime Logistics sees for 2022 and beyond:

Certainly, the market is growing. In 2019, the reefer container market was estimated at 3,169.2 thousand TEUs and by 2030, it’s projected to be 7063.3 thousand TEUs, according to a Prescient Strategic Intelligence report. A TEU is a 20-foot equivalent unit of cargo capacity for container ships. Each TEU is based on one 20-foot-long intermodal container.

Given the 2020-2021 shortages of reefer shipping containers, it’s also good news that shipping container manufacturers in the U.S., Europe, China, Taiwan, and elsewhere are now producing more new reefer containers than pre-pandemic. That’s helped reduce the length of shipping backlogs and improve availability in some regions.

The Perfect Storm

That said, the reality early in 2022 is that reefer containers are still scarce in many spots. So, continuing shipping delays are likely in 2022, particularly from certain regions. “People often ask us why the increased production of new reefer containers isn’t doing the trick to balance supply and demand,” notes Yulieth Onofre, Prime Logistics Group Sales Manager based in Miami. “Well, it’s a combination of factors that have created ‘the perfect storm.’”

For example, businesses stung by delays in shipping the past two years due to container shortages have increased their orders in a big way. “Many of our clients are shipping many more goods than in the past as they work to rebuild their inventories,” she emphasizes. Clients fearful of shipping delays are also ordering on a longer lead-time.

While Prime Logistics saw evidence late last summer that supply and demand were inching closer together, then the rise and spread of the Delta and Omicron variants of the COVID-19 virus reversed that dynamic. During this pandemic era, increased pharmaceutical transport of biologics, vaccines, cellular therapies, and blood products – all requiring temperature-controlled containers – is increasing.

Early in 2022, reefer cargo ships, both large and small, are fully utilized and in short supply in some regions. Separately, some vessels previously designated for reefer container business have been shifted by their owners to carry dry cargo instead.

Most notably, though, is that pandemic-weary consumers are in a “buy, buy, buy” mode.” Many retail establishments have reopened, and e-commerce is strong. Consumers are ordering “at will” on a day-to-day basis to reward themselves, often from the comfort of their living rooms. Product import levels, as a result, are record setting.

After more than a year of those record imports, month after month, the system is stressed to the max. “We’ve seen delays in port terminal access, ship schedules, rail services, truck transport, and also a shortage of equipment availability,” says Onofre. New ocean trade routes are also putting a strain on ocean reefer container ship availability.

“Yet, despite those supply chain issues beyond our control, our Prime Logistics team works around the clock to assist our clients,” she points out.  “We’re creative and solution-focused, and while we obviously can’t ‘fix’ the world’s supply chain issues, we’re committed to ensuring that our clients know all their options and keeping them informed.”

Demand is Off the Chart

Unfortunately, the cost of transporting goods continues to zoom higher as imports reach record levels and demand is “off the chart.” Thus, reefer container operators continue to raise prices for transport. In the December 2021 edition of “Drewry’s Container Forecaster” report, Drewry Maritime Financial Research (DMFR) projected higher freight rates in 2022 for businesses using reefer containers.

Trend-wise, Prime Logistics is seeing a bit less price inflation (although it’s still happening, for sure) on North-South trade routes for ocean transport of reefer containers; that’s particularly the case for export transport from some regions of South America and Central America. In contrast, East-West routes such as those between the U.S. and Asia are increasingly experiencing a bit higher price inflation.

Globally, Asia-Pacific (APAC) accounts for the largest share in the global reefer container market, and that’s expected to continue, according to a recent Prescient Strategic Intelligence report. But with rapid urbanization, Latin America (LATAM) is expected to post the highest growth rate in the market moving forward. Look for the most growth in the 40-foot reefer container category.

Supply Chain Challenges

Between 2020-2030, Prescient also projects global reefer container market growth at 8 percent. But can customers expect those pesky supply chain issues to disappear? Previously, Drewry had projected that ongoing supply-chain issues within the reefer container marketplace would begin easing by mid-2022. Now, it’s adjusted that projection to sometime in 2023.

“While we’re hoping that conditions will improve as the year progresses, this year is still likely to deliver many challenges for businesses,” acknowledges Onofre. “Definitely, give us a call if we can assist your business. We’re a solid, proactive asset to have on your side. We’ll assure you’re doing all possible to navigate successfully through the volatile reefer shipping marketplace in 2022.”

About Prime Logistics

One of four divisions of Prime Group, an international logistics services conglomerate founded in Ecuador in 2001, Prime Logistics serves to streamline, optimize, and expedite freight to and from the U.S. for a wide range of major industries.

With offices in Miami, New York, Los Angeles, Bogota, Quito, and Amsterdam, Prime Logistics capitalizes on its long-time relationships with the major air carriers and ocean lines to offer competitive rates in securing ample space to destinations all around the world.

For information, call 305-592-2044 or visit www.primelogisticsgroup.com.

As New Year Blossoms, Prime Logistics Readies for Busy Flower Season Ahead

Are you rested and ready for the New Year? You better be, as the floral transport industry is about to enter its busiest time of year – with the one-two-three punch of Valentine’s Day, International Women’s Day, and Mother’s Day upon us. You can rest assured, the experts at Prime Logistics are ready. We’ve been managing the shipment of international perishables and non-perishables for our customers for more than 20 years now!

Valentines Day Planning Underway

For this day of lovers, which is different than most other holidays, consumers generally stick with long-stem reds, pinks, and sometimes whites – millions of them. With a roughly 24-day period from the grower to the end customer, the first round of activity leading up to Valentine’s Day on February 14 is here. In fact, many wholesalers forward their price lists to retailers as soon as the day after Christmas. Next step, in about mid-January, is to send their supply lists to the South American flower growers, to ensure arrival starting the first few days of February. This is where Prime Logistics steps in.

With the official shipping window for this first major flower-giving period of the year being Jan. 20 to about Feb. 8, Prime Logistics and sister company Prime Fresh Handling project they’ll be managing nearly 8 million kg of flower shipments each month out of both Colombia and Ecuador during the first two months of 2022. Using our dedicated air cargo partners Atlas Air and Emirates SkyCargo, the successful handling of such an immense volume of product is a reflection of the deep dedication we have in bringing South America’s finest fresh flowers to U.S. wholesalers and retailers this time of year — and in fact to multiple customers around the world all throughout the year.

International Women’s Day

Following Valentine’s Day, our logistics teams basically have one week to recover before getting busy again. Next up is the peak period of production and distribution supporting International Women’s Day. With Ecuador serving as the primary source of flowers for this March 8 holiday each year, the efforts of our team in Quito and Amsterdam are crucial to advancing our shipping company’s winning strategies at meeting the demand of its valued customers.

In fact, the Ecuadorian flower market supplies more than 70 countries around the world with floriculture products. But when it comes to Women’s Day, Russia is the number one market.

On this day, people celebrate by delivering flowers to powerful women in their life, historically with the mimosa flower, a symbol of strength, sensibility, and sensitivity. White roses are also very popular.

Mother’s Day

And finally, it’s Mother’s Day on May 8, another hugely popular flower-giving holiday around the world. The peak period of activity preceding mum’s day is mid-April through about May 1. Accounting for one-fourth of the floral purchases made on any holiday, some call it the Super Bowl of flowers.

We call it another day at the office.

Well in excess of 20 million flowers from Colombia and Ecuador are planned to be cut, gathered, and shipped during the 2022 Valentine’s Day/Women’s Day season. We’re still assessing anticipated volume for Mother’s Day, so as soon as we catch our collective breath, we’ll get back to you on that!

Frantically filling back-to-back freighters from nose to tail, day after day, it’s a pressure-packed experience that’s exhausting and exhilarating all at the same time. We are fortunate at the Prime Logistics to boast some of the best-qualified and seasoned experts in the flower industry. They work hard to keep our ground game running smoothly for our customers, year after year.

So ‘tis the season for flowers, flowers, and more flowers. Prime Logistics is your service and we wish you all the best.