Why the Reefer LTL Market will Grow in 2019
The recent signing of the revised NAFTA agreement by President Donald Trump was a hidden gem for the reefer LTL industry. While there are several specifics that need to be fine-tuned and adjusted, the new trade agreement with Canada and Mexico will increase the export of US-based products that require temperature control. Beyond this new international trade agreement, the global reefer market is set for rapid expansion in 2019.
In the information below, we’ll articulate a few reasons why the Reefer LTL segment is expected to see some marginal gains as we approach the new decade.
What Commodities Ship via Reefer LTL Carriers?
To understand the reason why the reefer segment is expecting large gains, it’s first important to learn what is shipped in these temperature-controlled containers. Here are a few cold-storage commodities you’ll typically find being shipped via LTL carriers using reefer containers.
• Pharma Vaccines: The largest growing individual consumer product that depends on temperature-controlled shipping are pharmaceutical shipments of vaccines. Most vaccines for diseases that are taken by children at a younger age are manufactured in the United States. This is mainly due to the quality control standards that the US FDA places on pharmaceutical companies for the safe production and storage of these items. Since these vaccines are needed in foreign countries including Canada and Mexico, LTL carriers with reefer containers should see a growth in international shipping.
• Meats: The United States fresh meat industry is also expected to see a growth spurt thanks to new trade regulations. As poultry, pork, and beef all require cold storage to reduce the growth and spread of bacteria, shipping via reefer or frozen containers is the only safe option.
• Produce: When Donald Trump signed the new USMCA agreement, one of the first items he tweeted was “American farmers are going to love this new deal.” That’s mainly because the new agreement permits countries like Canada incentives to purchase US perishable produce like lettuce, carrots, and other US grown produce commodities. The Mexican agriculture segment will not be as competitive as Canada as they grow similar products.
• Computer Equipment: While China still holds a huge competitive advantage on cold-storage computer equipment, the US is growing in this segment. They also can be shipped to Mexico and Canada as more manufacturers continue to come back to the USA for production.
The need for safe and sustainable medication and food, particularly in Canada and Mexico was the primary reason why leaders from all three countries worked together to create the new USMCA agreement. Since most of these commodities require cold storage for shipment, the reefer LTL segment should see considerable growth in 2019.
What Other Factors Contribute to Reefer LTL Growth?
It’s often said that technology stimulates growth in every marketplace. Such is the case with LTL reefer shipments. Technology has a big impact on the operation of reefer systems. In fact, in recent years, reefer containers have been created with better refrigeration systems that require less maintenance, repairs and provide shippers with services they would never consider. Some of these features include:
• Improved communication: New reefer containers are being equipped with satellite technology that permits carriers to monitor the temperature, location, and status of their reefer shipments. This data can be relayed to the shipper, especially those who require constant monitoring of shipping temperatures to comply with Federal and international shipping regulations.
• Instant Proof of Delivery: Another new technology feature is the ability to track a reefer LTL shipment to each individual customer. The carrier is able to receive electronic signatures on deliveries, upload this data to their cloud-based CRM or TMS systems, and send automated notifications for instant proof of delivery. This feature improves customer service not only for the shipper but the receiver as well.
• More Efficient Reefers: HVAC and refrigeration companies have worked with container companies to develop reefer systems that operate more efficiently, require less routine maintenance, and saves their customers money. This attribute is then passed along to the shipper, who is inspired to use reefer shipments more frequently.
While there are some details that still need to be ironed out with the USMCA agreement, the reefer LTL segment is expected to see a significant growth spurt in 2019 for multiple reasons. If you’re a shipper that uses reefer shipments and are curious about finding the right LTL carrier, it might be in your best interest to contact an experienced 3PL, who can help you navigate this growing industry.