As the container shipping market continues its unprecedented price rally, the impact on global supply chains is profound. Since May, we have witnessed persistent disruptions, pushing freight rates to near pandemic-era highs. This surge is particularly evident in the Drewry and Freightos indices, highlighting significant increases in shipping costs.
Drewry’s world container index
Drewry’s world container index soared by 10% last week—a staggering 298% increase compared to the same week last year. This marks levels unseen since August 2022. Since early May, the index has surged by 84%, driven by ongoing supply chain disruptions and increased demand.
Freightos index
Freightos also reported an 11% increase last week, and despite this doubling since May, it remains slightly below Drewry’s figures.
Route-specific increases
China-US and China-Europe routes are the primary drivers behind this surge. Drewry reports a 124% increase on the China to Northwest Europe route and a 101% rise on China-US West Coast routes. Freightos echoes these trends, with West Europe rates up by 18% and US East Coast rates at $8897.
Contributing factors
This rally stems from multiple factors: the Red Sea crisis in December, blank sailings reducing capacity, and stronger-than-expected demand for Chinese goods in Europe and the US. Additionally, anticipated tariff increases have boosted Chinese exports, creating severe port congestion, shipment delays, and higher costs.
Future outlook
The persistent increase in freight rates raises critical questions about the duration and extent of this rally. Industry experts suggest that the logistical challenges will not be resolved soon. Some believe the recent issues can be mitigated by efficiently utilizing available capacity and adding more. However, ocean carriers might leverage this surge to apply larger surcharges, prolonging the rally.
At Szeplast Zrt, we are closely monitoring these developments to navigate the challenges posed by the volatile container shipping market. Understanding these dynamics helps us better prepare and strategize for the future, ensuring continued resilience and growth in our operations.
