Refrigerated transportation forecast
By: Phil Sneed
The global market for refrigerated transportation is expected to keep growing to at least 2020, according to a recent study from Research and Markets, a worldwide provider that offers insight on various industries.
In 2015, the global refrigerated market stood at approximately $10.4 billion dollars in term of value. Come 2020, that total is estimated to increase to $14.1 billion. This would equate to a compound annual growth rate of 6.27 percent.
Such explosive growth is being driven by specific needs along the supply chain. For example, the refrigerated perishable foods market is estimated to grow at a CAGR of 2.54 percent over the course of the next five years.
Fleets unsure about the refrigerated market should expect demand to only increase moving forward. Even though Research and Markets provided a global forecast, the U.S. trucking industry can expect a large portion of business opportunities in the country.
Importance of refrigerated transportation
Refrigerated transport is an essential component of the cold chain distribution system. In recent years, the growth of this type of transportation can be attributed to an increase in the demand for temperature-controlled food transport.
The supply chain is crucial to ensuring foods and other materials are delivered on time and safely. Various standards are required when transporting foods in a truck, especially across the hot Texas landscape. Without today's technology, no food would arrive safely. Logistics help ensure the entire delivery process is as smooth as possible.
What is driving growth?
Two population trends have been cited by Research and Markets as catalysts for the future growth: higher populations and urbanization. While other parts of the world are still considered developing countries, here in the U.S., a growing population and a desire for healthier food and overall consumption habits are cited as growth factors.
"North America is expected to grow at a CAGR of 6.15 percent from now until 2020."
The refrigerated market in North America is expected to grow at a CAGR of 6.15 percent from now until 2020. Furthermore, the U.S. industry is expected to dominate this growth, which works well for U.S. companies.
Effect on pricing
In the short term, the expected growth is going to have a few effects on the American trucking industry.
When it comes to pricing, the economy will provide some temporary relief, but the uncertainty of the driver shortage still lingers.
This relief is seen in the latest national reefer rates provided by DAT Solutions. During the week of Feb. 14 – Feb. 20, rates slid 1 cent to $1.84 per mile.
In the area around McAllen, Texas, reefer rates were $1.79 by the mile, the second highest in the country.
The decline corresponds to a decrease in load-to-truck ratio of 7 percent. However, the Texas region still remains strong, having posted a load-to-truck ratio of 5.6 – 11.9.
These numbers are bound to fluctuate in the coming months, however, fleets should be aware that in all likelihood, it will cost more to transport frozen foods. The uncertainty over the driver shortage is too big to ignore.
That doesn't mean the industry will face downhill projections. If the refrigerated transportation forecasts hold true, U.S. companies, especially those operating in and around Texas, can expect more business and financial opportunities.