Container Shipping Rates Surge After Dropping Early 2024

Container shipping rates have seen a dramatic increase since May 2nd, 2024, following a period of decline. This surge is attributed to several factors:

  • Congestion in Asian ports
  • High import demand in the US
  • Reduced capacity on Asia-Europe routes
  • Geopolitical tensions in the Red Sea

These factors caused a 28.8% increase in rates over just two weeks.

Earlier Rate Decline and Carrier Profits

Prior to the recent surge, container shipping rates had been steadily decreasing week-on-week since January 25th, 2024. This decline benefited container shipping companies, boosting their profits and share prices by 19% year-to-date.

Short-Term Causes of Rate Increase

Experts believe the current rate increase is driven by temporary issues:

  • Port congestion
  • Empty container repositioning
  • Capacity shortage on Europe routes due to Red Sea diversions

Impact of Suez Canal Reopening

The Suez Canal closure significantly impacted shipping routes, forcing diversions through the Red Sea. While a potential reopening could free up capacity, analysts predict an overcapacity situation in the short term. Shipping companies have already adjusted their networks for the Cape route.

Future Capacity and Peak Season

An additional 2 million TEUs of capacity is expected to be delivered in 2024, helping to alleviate the shortage on Asia-Europe routes. However, factors like:

  • Increased demand for India-Europe and Asia-US East Coast routes
  • Projected 3% volume growth

will likely absorb this additional capacity. Analysts also anticipate a strong peak season, further supporting the need for more ships.

Current Capacity Shortage

As of May 10th, 2024, the three main shipping alliances were operating 36 vessels short of what’s needed for Asia-Europe routes. This shortage forced lines to cancel 9.6% of weekly sailings. The impact varies by alliance, with the Ocean Alliance facing the most significant shortage (20 vessels).

Carriers Responding to Shortage

Maersk and MSC have already begun vessel sharing to manage the capacity discrepancy caused by Cape diversions.


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