Will Haeun Fresh Cargo Stumble Due to COVID-19? "Recovery Expected in the Second Half"

Slowdown in the First Half Due to COVID-19 Spread
Expectations for Recovery in the Second Half Supported by Global Economic Rebound

[Asia Economy Reporter Yu Je-hoon] The fresh cargo sector, considered a new growth driver in the shipping industry, has been sluggish due to the global COVID-19 pandemic. However, the industry expects that fresh cargo performance is likely to recover as the market growth remains solid and countries around the world have been gradually resuming economic activities in the second half of the year.

According to the shipping industry on the 29th, HMM's refrigerated container (reefer container) volume in the first half of this year was 80,000 TEU (a unit referring to one 6-meter container), with sales reaching 110 million dollars (approximately 129 billion KRW). This is less than half of last year's total performance (199,000 TEU, 240 million dollars).

HMM's fresh cargo volume and sales have shown steady growth over the past several years. Volume increased by about 28%, from 164,000 TEU in 2016 to 211,000 TEU in 2018, and sales rose by about 21%, from 207 million dollars to 250 million dollars. Last year, due to global abnormal weather events and other factors, the volume remained flat at 199,000 TEU.

The reason for the reefer container performance showing signs of stagnation in the first half of this year is attributed to the 'lockdowns' implemented by various countries due to COVID-19. Lockdown policies, such as restrictions on the use of food and beverage establishments in major consumer countries like Europe to prevent the spread of COVID-19, naturally led to a decrease in demand for fresh cargo.

An HMM official said, "We believe this is a result of the downturn in the dining-out industry in various countries due to COVID-19," adding, "However, despite the clear market contraction, we actively developed high-quality cargo with high freight rates, achieving the highest level of sales per unit (TEU)."

The industry expects that reefer container performance will show a clear recovery in the second half of the year. Although concerns about a second wave of COVID-19 remain, as countries resume economic activities, demand for fresh cargo is also increasing again.

The outlook for the business itself is also positive. Drewry, a British shipbuilding and shipping analysis firm, recently predicted that the average annual growth rate of fresh cargo demand from 2019 to 2024 will be about 3.7%, surpassing the growth rate of dry bulk cargo (2.2%). Drewry noted, "Fresh cargo is expected to cope better with the economic aftershocks caused by COVID-19 compared to dry bulk cargo."