LONDON – Spot ocean container rates continue to see rapid increases, rising 16% this week. They’ve now risen 46% in three weeks.
According to container price tracker Drewry, spot rates hit an average of $4,072 per 40-foot container, a number 142% higher than the same week last year. They’re now 187% higher than 2019’s pre-pandemic average of $1,420.
Rates again rose across all trade routes. Shanghai to Los Angeles saw rates rise 18% to $5,277. Rates on the route have now risen 48% in three weeks. Shanghai to New York rates rose 13% to $6,463, with prices now up 41% in three weeks.
Rates seem to be rising for a variety of reasons, including increased demand from North American importers – who are anticipating inventory needs for the second half of the year – and increasing port congestion. They also could be rising due to increased blank sailings, per FreightWaves, as ocean carriers are cutting capacity.
“This increase in blank sailings is driven by the Red Sea crisis,” wrote ocean shipping analyst Sea-Intelligence in a blog post. “Port congestion is worsening in key hubs in both Asia and Europe. And as was clearly seen during the pandemic, port congestion soaks up supply and leads to potential capacity shortages. As we have said since the start of the Red Sea crisis: There is sufficient capacity to divert vessels around Africa, but not enough additional slack to deal with other major disruptions. Port congestion therefore needs to be brought under control, or spot rates could escalate even further, and quite quickly.”
Fellow shipping analyst Xeneta had similar comments:
“Demand reached record levels in Q1 2024, up by 9.2% compared with Q1 2023, and comes at a time when the Red Sea situation is putting increased pressure on shipping capacity,” said Emily Stausbøll, Xeneta’s senior shipping analyst in a blog post. “But significantly, this is all taking place while the chaos of port congestion and lack of available capacity during the COVID pandemic is still fresh in the memory of shippers.
“Lessons will have been learned from the pandemic. If shippers fear there is going to be a squeeze on capacity during the peak season in Q3, then they are going to start importing more goods now,” she said. “If these increased volumes need to be moved on the spot market, then it is going to put upwards pressure on rates.”
Are you seeing higher rates? If so, are you concerned? Let me know by emailing me at rdalheim@furnituretoday.com.