Reefer Demand Rising at "Warp Speed"

With the COVID-19 vaccines already being distributed, expect reefer capacity to continue to tighten and spot rates continue to increase in the first half of 2021.

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With the vaccine here, getting back to the normal we once lived may not be all that far off. However, to get there means we have to quickly and efficiently distribute the vaccine. As “Operation Warp Speed” accelerates, the spotlight has intensified on the vaccine's transportation, and more specifically, on the need for reefer transportation.

For example, the Moderna vaccine must be kept at -20°C or -4°F during transport. As expected, capacity would loosen after the holidays, but reefer tender rejections are still high and cause for concern. And, that figure will only continue to grow.

When you look at the reefer market as a whole, it makes up roughly 20% of the contracted freight market volume, including transport of fruit, vegetables, meats, produce, dairy, flowers, chemical products, and of course, medicines. Because of the extreme sensitivities with the temperature-controlled vaccines from Pfizer and Moderna, reefer needs have continued to increase at incredible pace. This has caused a supply chain disruption with many retailers, grocers and other food and beverage and consumer packaged goods companies that rely on reefer transport for their products. Unfortunately for many shippers, the demand is only increasing and causing rates to spike.

While it’s easy to look at large companies taking this hit, it’s easy to see the smaller ones taking it on the chin as well. Think about the local restaurant chain that has changed their menu based on either the rising cost of certain products (meats and produce) or the inability to deliver on time. The ongoing supply chain disruption and the higher-than-average spot rates are very much a part of the reefer distribution story.

Shippers in certain cities and regions across the country will have to plan for steep transportation costs due to a lack of reefer trailers in the market. That also means preparing for higher-than-average spot rates. The immediate capacity constraints related to the massive efforts to distribute the vaccine will undoubtedly create more pressure than was previously seen in the holiday season and recent winter months. But, shippers can protect themselves with a dense customer freight network, allowing them to combat truck shortages and rates through other inbound/dedicated lanes. 

With produce season just around the corner and many cities opening back up, it’s crucial shippers prepare themselves to meet demand. One solution is to work with a large-scale provider that has the flexibility and network capacity. If you ship perishables or temperature-controlled commodities that needs reefer transport, you should consider working with the aforementioned tech-enabled provider that has a large carrier network. The sensitive nature of the items that need to be shipped require experienced drivers and the right equipment. Improper equipment or inexperience can lead to spoilage or contamination. With the Pfizer vaccine (-70°C or colder) and the Moderna vaccine already being distributed, expect reefer capacity to continue to tighten and spot rates continue to increase in the first half of 2021.