LONDON – Spot ocean container rates rose 11% on average this week to $3,511 per 40-foot container, according to container price analyst Drewry. Last week, they rose 16% on average.
Rates are now 147% higher than the pre-pandemic 2019 average of $1,420 and $524 higher than the 10-year average of $2,717 (which was inflated during the pandemic).
Rates rose across all trade routes. Shanghai to Los Angeles and Shanghai to New York both saw prices rise 12%, to $4,476 and $5,717, respectively. Last week, rates from Shanghai to Los Angeles surged 18%, while Shanghai to New York rose 16%.
It’s not totally clear why rates are rising. But global freight intelligence platform Xeneta tries to break it down:
“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.
“Many U.S. shippers used 2023 to bring down inventory levels from the pandemic highs, which means there is likely space in newbuilt warehouses to frontload imports ahead of peak season and build a buffer into supply chains. The risk of having too high inventories is more palatable than the risk of having goods arrive too late.”