The Journal of Commerce reports that combined market pressures on refrigerated container 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, 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 they are 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.”

According to William Duggan, North American advisor at reefer market consultant Eskesen Advisory, it is not 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's beef production, exports

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% year-over-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 agrees that demand and buying power will drive equipment availability into Q1 2025 and said some shippers may bear the burden of asset scarcity.

“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.”

Article by: Laura Robb, Associate Editor of the Journal of Commerce