Skip to main content
    CAREERS LOGIN

    What Are Reefer Shipments? Costs, Demand & Capacity

     

    When summer heats up, how do you ensure your temperature-sensitive shipments arrive safely? Summer shipping means dealing with unique seasonal challenges like heat, and reefer shipments are becoming increasingly in demand throughout your supply chain.

    Reefer freight shipments refer to temperature-controlled, refrigerated freight. Any and all products that require cool temperatures need refrigeration so they don't spoil or get damaged. This includes shipping for agricultural products like food and beverage, hazardous chemicals, pharmaceuticals, and more along with the distributors and carriers of these products that require a temperature-controlled environment for any stage of their shipping process.

    Reefer shipping is an essential part of our supply chain, but it does come with unique challenges. In this blog post, we will break down everything you need to know about reefer shipping, so you can be well informed as summer gets into full gear.

    What's Causing the Increase in Reefer Shipping?

    Implementation of new technology is one reason for an increase in reefer shipping, and a more accessible nationwide supply chain. Using advanced GPS tracking systems in your truck fleets and cargo fleets, you can become more efficient. Additionally, you are better able to drive prices down, making a wider range of products more accessible to a broader audience.

    In addition to various advances in supply chain technology, the rise in popularity of the e-commerce industry has greatly increased all types of shipping, reefer shipping included. Now, thanks to the popularity of businesses like Amazon, customers can order almost any product straight to their door.

    Also, reefer shipping in the U.S. is a seasonal business, meaning that demand for refrigerated shipments increase in the summer as temperatures rise.

    What's Driving Rising Reefer Shipping Costs?

    Increase in Demand

    The increase in demand for reefer shipping is a big factor when considering the increase in costs. During the pandemic and even now, as consumers stayed home or saved money on their usual expenses, the e-commerce industry boomed—and you likely felt the impact on your shipping operations.

    In some cases, the demand increased too much for the supply. The result was not enough inventory, too few drivers, and other disruptions in the supply chain.

    Increase in Competition and Supply Chain Disruptions

    Reefer freight rate inflation has increased in part due to dry freight BCOs for containers. In addition, supply chain disruptions related to reefer shipping containers further drive reefer freight shipping inflation rates. According to their data, rates increased by 32% in Q2 of 2021.

    Fuel Prices

    Fuel prices have impacted every part of the supply chain, especially reefer shipping. Refrigerated trucks require diesel to get them from point A to point B. However, they also rely on fuel to keep their containers temperature-controlled.. According to the U.S. Energy Information Administration (EIA), in 2021 the average diesel price was $3.287 per gallon, and in May of 2022, the average price was $5.571 per gallon.

    Reefer Load-To-Truck Ratio

    When you're evaluating demand and truck capacity, the load-to-truck ratio is an invaluable number to examine. High load-to-truck ratios cause higher freight rates, stalled shipments, and other disruptions.

    The number fluctuates often and it may bounce up, down, and back up as demand rises as summer temperatures rise and shipments are distributed at a faster rate.

    Spot Rate

    Although many businesses rely on reefer shipping year-round, reefer shipping is especially important during the summer months as temperatures increase. A popular way to analyze the supply and demand of reefer shipping is by looking at the spot rate.

    Spot rates are used for a number of reasons. Primarily, you may turn to spot rates when your usual carriers can't cover a shipment, there isn't enough freight for a contract shipment, or you have an unexpected shipment. In other words, when primary carriers and contract shipments can't be justified, you use spot rates.

    This is a good indication that traditional carriers cannot meet the rising demand, and you may need to increase your spot shipments.

    Final Thoughts

    Summer reefer shipping comes with the usual challenges of seasonal demand and summer maintenance. However, the supply chain continuously sees disruptions and demand for goods remains high. Consequently, this Summer may present a particular challenge for reefer shipments as companies compete for containers and face new challenges.

    FAQs

    What is a reefer shipment?

    A reefer shipment is a temperature-controlled freight move that uses refrigerated equipment to keep products cool in transit. It is commonly used for food and beverage goods, pharmaceuticals, hazardous chemicals, and other items that can spoil or be damaged if temperatures change. Reefer shipping helps protect product quality from pickup to delivery.

    Why are reefer shipping costs going up?

    Reefer shipping costs are rising mainly because demand is increasing faster than supply. Seasonal summer demand, e-commerce growth, supply chain disruptions, and competition for refrigerated equipment all put pressure on rates. Higher fuel prices also matter because refrigerated trucks need diesel both to move freight and to maintain temperature control during transit.

    How do fuel prices affect reefer shipments?

    Fuel prices have a direct impact on reefer shipments because refrigerated trucks depend on diesel to operate and to keep cargo temperature-controlled. When diesel prices rise, carriers face higher operating costs, and those costs often show up in freight pricing. The article notes diesel averaged $3.287 per gallon in 2021 and $5.571 in May 2022.

    What is the reefer load-to-truck ratio and why does it matter?

    The reefer load-to-truck ratio compares available refrigerated loads with the number of trucks available to haul them. A higher ratio means tighter capacity, which usually leads to higher freight rates, slower coverage, and more shipment disruptions. In the article, the national average rose from 4.09 in 2019 to 12.47 in 2021, showing how tight the market became.

    When do reefer shipping rates usually increase the most?

    Reefer shipping rates usually increase most in the summer, when hotter weather raises demand for temperature-controlled freight. The article also shows that spot rates have spiked during periods of tight capacity and strong demand, such as January 2022. Seasonal pressure makes summer a particularly challenging time for reefer shipments.

    What is the spot rate for reefer shipping used for?

    The spot rate is used when a shipment cannot be covered by a primary carrier or contract freight arrangement. It is also used for unexpected shipments or when there is not enough freight volume to justify a contract move. In reefer shipping, rising spot rates usually signal that demand is outpacing available capacity.

    What factors caused reefer shipping demand to grow?

    Reefer shipping demand has grown because of new supply chain technology, wider access to nationwide distribution, and the rise of e-commerce. Better GPS tracking and fleet visibility can improve efficiency, while online retail has increased the volume of goods moving to consumers. Summer also adds a seasonal demand spike for refrigerated freight.