Stay up to date on the latest information on condition’s impacting the freight market, curated by Trinity Logistics with special thanks to our friends from Broughton Capital LLC.
Not interested in reading? Watch the video instead and hear more from our team about the current reefer transportation market.
This month, with the assistance of our partners at Broughton Capital LLC, we want to take a deep dive into the refrigerated transportation market. In the spring of 2020, when Americans were forced to curtail activity due to the pandemic, the reefer segment of trucking rapidly increased as Americans began to spend more on goods that necessitated temperature control. This was not only for items that were purchased at grocery stores. Ready-to prepare meals became more commonplace, along with an increase in pharmaceuticals, such as vaccines, and reefer capacity became a premium. In looking at the Broughton Capital Trucking Barometer which is solely focused on reefer activity in Figure 1.1, you can see the acceleration in the middle of 2020, remaining elevated since. Typically, a barometer rating of 50 indicates a balanced market, so you can see demand has outpaced supply for 18+ months and all signs point to this imbalance remaining in place through at least 2022.
For shippers that were anticipating spot and contract reefer rates to begin to retreat, unfortunately that scenario does not appear likely. In fact, as illustrated in Figure 1.2, both spot and contract rates will realize increases anywhere between 5-13% over the next few years. Most everyone is aware that more meals are now consumed at home, whether that is through purchases directly at the grocery store, ready-to-prepare meal kits such as Butcher Box or ordering direct from restaurants. Another component is the rise of new homeowners. As the economy has spurred activity with first-time home buyers, and the formation of new households, this will further drive consumption of products delivered through refrigerated trucking companies. This increased demand, coupled with no visible signs of an influx of refrigerated capacity, will keep rates elevated.
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