51.8 F
New York
Wednesday, March 3, 2021

Pete Buttigieg to Lead Department of Transportation

We wrote about what a Biden presidency would mean for the trucking industry in mid-November. In that article, our first point was that the...

Latest Posts

Coronavirus Vaccine Further Strains Reefer Capacity

The COVID-19 vaccine seems to be a rousing success, as companies developing them tout a 90-95% efficacy rate in testing. We have already written about one of the difficulties of distribution of the vaccine: keeping the vaccines cold. In that article, we lightly scratched on another problem that deserves more attention: the demand for reefer trailers to ship the vaccines will supersede shipments of other goods.

The Value of a Reefer

The coronavirus vaccine needs to be kept below -70 degrees Celsius (-94 degrees Fahrenheit) to maintain maximum potency. While reefers cannot possibly keep this low of a temperature on their own, other coolants such as dry ice will need to be employed, use of an insulated refrigerated trailer will slow heating far better than a dry van ever would. In an emergency case like this where many states are considering enacting another lockdown, every advantage in distributing the vaccine helps.

The logistics become muddier when it becomes apparent that the reefer sub-industry is already running near or at max capacity. There are two indicators of this: one is the consistently rising reefer rates per mile that indicate demand grows faster than the supply of the delivery service, and Freightwaves’ Reefer Outbound Tender Rejection Index (ROTRI), which measures of a scale of 0 to 100, what percent of requested loads submitted by customers are rejected.

Currently the ROTRI is hovering above 48, meaning almost half of all requests are rejected. This is the highest the ROTRI has ever reached. With such high demand for the use of reefers, carriers have more options to reject or decline shipments they dislike. Such reasons for rejection can be the stated price of shipment or the direction/location the shipment is being sent.

With the coronavirus vaccine being considered of the utmost critical importance to get the economy back into high gear, there is a high chance the US government would be willing to pay top dollar for distribution of the vaccine. This will make it difficult for companies wanting to ship other items such as raw beef to compete until vaccine shipment is completed.

Freightwaves measures the ROTRI on 53-foot trailers only. While the COVID-19 vaccine is more likely to be shipped on smaller reefer trailers because smaller is easier to keep cool, the claiming of smaller trailers will have an indirect raise on the ROTRI as other companies start using them to substitute their smaller trailer usage.

Conclusion

Even if you or your fleet has no interest whatsoever in shipping the vaccines, now is a great time to be a reefer driver. The increased demand on smaller trailers will put some upward pressure on the already high rates of reefer shipments.

Normally market economics would say that an increased rate per mile would bring more people to drive reefer trailers, but because the coronavirus vaccine shipments are a temporary deal, new entrants into the market will not have much time to enter before prices stabilize. It is currently a feeding frenzy for those already in the business. It will be interesting to see how long it lasts.

Latest Posts

Don't Miss

Stay in touch

To be updated with all the latest news, offers and special announcements.