The hidden reasons behind the surge in shipping container spot freight
Spot freight rates for Marine containers have surged in recent weeks, marking a dramatic change from the volatile price environment that has dominated much of 2024. After a year of volatility and uncertainty, shippers are now grappling with rapidly rising costs, especially on the key eastbound trans-Pacific trade route.
The Drury World Container Index, released Thursday, showed that container rates rose 3% week on week to $3,905 per 40-foot TEU, mainly due to higher rates on trans-Pacific routes from Asia to U.S. West and East Coast ports. Spot freight rates between Shanghai and Los Angeles rose 7%, or $330 per 40-foot TEU, to $4,829 per 40-foot TEU, while spot freight rates between Shanghai and New York rose 6%, or $371 per 40-foot TEU, to $6,445 per 40-foot TEU.
That continued the December rally. Container freight rates from Asia to U.S. West Coast ports rose 8 percent to $4,825 per FEU in the week ended Dec. 27, 2024, according to Freightos. Over the same period, prices from Asia to the US East Coast rose 3% to $6,116 per FEU.
Judah Levine, head of research at Freightos, pointed to several factors contributing to the increase in shipping rates: "Ocean freight rates outside of Asia were generally on a small upward trend towards the end of the year, but with the approach of the Lunar New Year and a series of general freight rate increases (GRI) announced by [ocean carriers] across the Trans-Pacific in January, container prices on these routes could face upward pressure in early 2025."
There are several key factors driving the increase in imports and the subsequent rise in freight rates. First, shippers are bringing forward shipments for potential disruptions. The looming threat of a port strike by the International Longshoremen's Association (ILA) in January 2025 has prompted many importers to speed up shipments. In an advisory issued on Wednesday, Maersk urged customers to "pick up full containers and return empty containers at U.S. Eastern and Gulf Coast ports by Jan. 15" in case of possible industrial action.
Importers are also rushing to complete deals before the Trump administration raises tariffs soon after taking office. Together, these factors have led to a surge in demand for container shipping space, enabling carriers to implement and sustain higher freight rates.
This trend is further exacerbated by the increase in traditional activities ahead of the Lunar New Year 2025 (end of January). Factories in Asia typically close for the Lunar New Year, leading to a rush of shipments in the weeks leading up to the Lunar New Year.
Looking ahead, industry analysts expect the current rate momentum to continue until early 2025, although it may moderate somewhat. Drury predicted that "freight rates for trans-Pacific trade will rise in the coming week due to early loading ahead of the upcoming ILA port strike in January 2025 and expected tariff increases from the incoming Trump administration."
But Freightos predicts some relief later in the first quarter: "The seasonal drop in demand starting in late February should lead to rate relief on routes outside Asia, although the Red Sea diversion will keep rates well above long-term averages, as they will be through 2024," Levin wrote.
As shippers deal with this complex and rapidly changing freight environment, many are likely to face higher shipping costs in the short term. The ability to quickly adapt to changing market conditions and potential disruptions will be critical for businesses that rely on maritime transport in 2025.
The Drury World Container Index, released Thursday, showed that container rates rose 3% week on week to $3,905 per 40-foot TEU, mainly due to higher rates on trans-Pacific routes from Asia to U.S. West and East Coast ports. Spot freight rates between Shanghai and Los Angeles rose 7%, or $330 per 40-foot TEU, to $4,829 per 40-foot TEU, while spot freight rates between Shanghai and New York rose 6%, or $371 per 40-foot TEU, to $6,445 per 40-foot TEU.
That continued the December rally. Container freight rates from Asia to U.S. West Coast ports rose 8 percent to $4,825 per FEU in the week ended Dec. 27, 2024, according to Freightos. Over the same period, prices from Asia to the US East Coast rose 3% to $6,116 per FEU.
Judah Levine, head of research at Freightos, pointed to several factors contributing to the increase in shipping rates: "Ocean freight rates outside of Asia were generally on a small upward trend towards the end of the year, but with the approach of the Lunar New Year and a series of general freight rate increases (GRI) announced by [ocean carriers] across the Trans-Pacific in January, container prices on these routes could face upward pressure in early 2025."
There are several key factors driving the increase in imports and the subsequent rise in freight rates. First, shippers are bringing forward shipments for potential disruptions. The looming threat of a port strike by the International Longshoremen's Association (ILA) in January 2025 has prompted many importers to speed up shipments. In an advisory issued on Wednesday, Maersk urged customers to "pick up full containers and return empty containers at U.S. Eastern and Gulf Coast ports by Jan. 15" in case of possible industrial action.
Importers are also rushing to complete deals before the Trump administration raises tariffs soon after taking office. Together, these factors have led to a surge in demand for container shipping space, enabling carriers to implement and sustain higher freight rates.
This trend is further exacerbated by the increase in traditional activities ahead of the Lunar New Year 2025 (end of January). Factories in Asia typically close for the Lunar New Year, leading to a rush of shipments in the weeks leading up to the Lunar New Year.
Looking ahead, industry analysts expect the current rate momentum to continue until early 2025, although it may moderate somewhat. Drury predicted that "freight rates for trans-Pacific trade will rise in the coming week due to early loading ahead of the upcoming ILA port strike in January 2025 and expected tariff increases from the incoming Trump administration."
But Freightos predicts some relief later in the first quarter: "The seasonal drop in demand starting in late February should lead to rate relief on routes outside Asia, although the Red Sea diversion will keep rates well above long-term averages, as they will be through 2024," Levin wrote.
As shippers deal with this complex and rapidly changing freight environment, many are likely to face higher shipping costs in the short term. The ability to quickly adapt to changing market conditions and potential disruptions will be critical for businesses that rely on maritime transport in 2025.
