Spot container rates from Shanghai to Los Angeles have increased by more than 30% in the past three weeks, rising by approximately $1,300 per 40-foot container. According to Drewry, a container rate tracker, the average rate for this route now stands at $4,829, which is a significant jump since December 12, 2024. Rates from Shanghai to New York have also seen a notable rise, climbing by 25% to reach $6,445. These hikes mark a sharp contrast to pre-pandemic levels, with average rates for all routes being 175% higher than the 2019 average of $1,420.
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In 2024, the average rate across all routes was $3,905, which is around $1,040 above the 10-year average of $2,865, a figure that was influenced by the extraordinary circumstances of the COVID-19 period from 2020 to 2022. Drewry predicts that rates on Transpacific trade will continue to rise in the coming weeks, driven by front-loading ahead of an impending International Longshoremen's Association (ILA) port strike and potential tariff increases under the incoming Trump Administration.
The strong position of container shipping companies has been highlighted by LinerLytica, a container industry blog, which noted that 2024 is set to be the most profitable year for these companies since the COVID-19 windfalls of 2021 and 2022. This growth is attributed to the diversions in the Red Sea, which have absorbed a large portion of the 2.94 million TEU (Twenty-foot Equivalent Unit) of new container ships delivered over the past 12 months. As a result, both freight and charter markets have remained elevated.
LinerLytica further reported that freight rates have continued to perform well towards the end of 2024. While Asia-Europe rates have held steady, Transpacific rates experienced a strong rally at the year's end, recovering some of the losses seen since October. This surge in rates puts shipping companies in a stronger position for upcoming contract rate negotiations, where they are expected to secure marginal increases compared to last year's agreements.
The rise in container rates is expected to continue to have a ripple effect throughout the shipping industry. With new container ship deliveries at their highest in six decades, the market is facing a more complex and dynamic environment. As the sector prepares for a busy year, container shipping companies are positioned to benefit from sustained demand and higher rates, despite the challenges presented by increased capacity and potential disruptions.
Source: www.designerstoday.com