Ratification of the Trans-Pacific Partnership (TPP) free-trade deal will be a boon for the Australian reefer trade, according to Shipping Australia Limited (SAL).
The TPP, or Pacific Rim, trade deal will lift 95% of tariffs on a broad range of Australian agricultural exports, according to the Australian government, with beef, dairy, and grains among the main winners.
SAL CEO Rod Nairn told IHS Maritime he predicted reefer shipping profitability would improve once the full impact of the TPP came into force in 2016.
“With increasing cold exports such as meat and dairy, I would expect an increase in reefer shipping prices,” Nairn said. “Plugs and hardware are already in limited supply and close to full utilisation on most routes.
“There is certainly good news for shipping companies in the TPP. The removal of tariffs across a broad range of agricultural and manufactured products is a big win. This should provide better access to the big American markets, level the playing field in dairy exports, and boost volumes of Australian food exports.”
Nairn told IHS Maritime the trend for increase in reefer traffic was already evident in the Australia/US trade. “For the first six months of this year [compared with the same period last year] reefer volumes increased by more than 40%, whereas dry was only up a few per cent,” he said.
However the Asian trades suffered a reduction in both, down about 4% in dries and double that in reefer (mainly driven by the slowing Chinese economy), according to SAL data.
Nairn hoped some of the demand would be seen in dry container exports as well. He noted dry rates had been unreasonably low because of oversupply driven by Australia’s trade imbalance.
“One thing is certain: the shipping industry is ready to meet any increase in demand for Australian exports,” Nairn said, adding he would be keen to see the full details of the agreement when they become available.
The Department of Infrastructure and Regional Development, which publishes overall container volume statistics each quarter, told IHS Maritime it did not hold any statistics on reefer volumes at this time.
Meanwhile, Drewry’s Reefer Box Capacity Forecast report, released in August, predicted the world’s reefer container ship fleet would grow by 20% by 2018.
Worldwide seaborne reefer cargo grew 4.9% in 2014, it found, only just matching the growth in reefer cargo.