International Maritime

‘ Perfect storm ’ pushes market toward Q4 reefer equipment shortages

Beef production in Brazil is expected to rise 7.1 % in 2024 , with exports forecast to jump 13.4 %. Shutterstock . com

By Laura Robb

Combined market pressures on refrigerated container ( reefer ) equipment could put a strain on perishable Latin American exports in the fourth quarter and into 2025 , market sources say .

In a reefer market already stretched by the extended transit times brought on by diversions around the Cape of Good Hope in southern Africa , a push to export Brazilian beef — combined with traditional seasonal demand — could further test shippers .

Eric Brown , president at JTP Transportation and chair member of the Meat Import Council of America , said JTP is predicting an equipment shortage due to the extenuating market factors .

“ The US is producing less beef , and Australia had to cull a lot of their herds due to a drought this year ,” Brown said . “ A lot of that meat is being also sent to the US because the dollar is so strong . The dollar is good , there ’ s a drought in Australia , there are small herds in the US , and the rates for Brazilian beef are great , so it ’ s a perfect storm .”

“ The US is producing less beef ... and the rates for Brazilian beef are great , so it ’ s a perfect storm .”

According to William Duggan , North American adviser at reefer market consultant Eskesen Advisory , it isn ’ t unusual for refrigerated container equipment to become strained during the market ’ s perishable peak season . But conditions in 2024 could exacerbate those hurdles .

“ If you look at Q4 and Q1 , that is the peak of the peak ,” said Duggan , who is also a board member at the Global Cold Chain Alliance . “ Equipment is always tight then . Combined with the problems from the Suez , which impacts all of these trades , [ it could be worse ] ... Equipment gets bundled up and can ’ t get to places like Brazil and Argentina for their export seasons . We will start to see that happening .”

Jump in Brazil beef

According to National Supply Company , a Brazilian agency linked to the Ministry of Agrarian Development and Family Farming , Brazil is expected to see a 7.1 % yearover-year increase in beef production in 2024 and a 13.4 % jump in beef exports . Moreover , a concurrent mango season will put further pressure on equipment availability .

Those increases will further strain global reefer equipment availability , potentially impacting perishable cargo viability amid the slowdowns brought on by equipment shortages . The consequences of a significant reefer equipment problem could reach beyond the cold chain amid existing space constrictions on the north-south lane , said Fabrizio De Paulis , managing director of Brazilian forwarder De Paulis Logistics & SCM Eireli .

“ It happened when we had the fruit export season from Chile , affecting the empties availability in Brazil ,” De Paulis said . “ Shippers would need to reschedule shipments [ and ] would need to find alternative [ ports ] in Brazil . The reefers would be deviated [ to ports ] with more demand .”

Duggan agreed that demand and buying power will drive equipment availability into the first quarter of 2025 , and said some shippers may bear more of the burden .

“ It ’ s always been a tight market to supply during that period of time , but if there is demand for the Brazil product , they will be competing for equipment with the perishable cargo ,” Duggan said . “ If perishable rates out of Peru or Chile pay higher than beef out of Brazil , they may get a better allocation .”

email : laura . robb @ spglobal . com

20 Journal of Commerce | October 7 , 2024 www . joc . com