A sudden shortage of containers in the US is causing a sharp increase in shipping rates

The shortage of container capacity has hit global trade just as peak shipping season begins, leading to a sharp increase in ocean freight rates by approximately 30% over the past few weeks and is expected to continue rising. Bad weather, longer sea routes, and skipped ports are adding to supply chain issues. Xeneta warns that rates could continue to rise in June, which would have a dramatic impact on consumer prices.

Return of $10,000 Rates per Container

The cost of shipping a standard 40-foot container from Shanghai to New York has risen to nearly $10,000, a level not seen since the peak of the Covid-19 pandemic. Xeneta reports that spot rates have increased by an average of $1,500 on routes to the USA since the end of April, and some of the highest contractual rates now exceed double the rates from last month.

Record Volumes at the Port of Los Angeles

The Port of Los Angeles recorded a record shipping volume in July 2024, handling 939,600 twenty-foot equivalent units (TEUs), a 37% increase compared to the previous year. This increase is the result of an early start to the peak season and geopolitical factors affecting trade flows.

Gene Seroka, Executive Director of the Port of Los Angeles, stated that this record volume was mainly due to the early arrival of Christmas goods such as toys, electronics, and clothing, which usually arrive later in the year. “These goods are coming in alongside traditional shipments for back-to-school, fall fashion, and Halloween,” Seroka added during a media briefing.

In the first seven months of 2024, the port processed a total of 5,671,091 TEUs, an 18% increase compared to the same period in 2023. This growth is attributed not only to the early arrival of seasonal goods but also to concerns about potential delays caused by an expected strike on the East and South coasts of the USA.

Alongside the Port of Los Angeles, neighboring Port of Long Beach also had a record July, processing 882,376 TEUs, representing a 52.6% increase compared to the same month last year. This volume surpassed the previous record from July 2022 by 12.4%.

Paul Bingham, an economist and data analyst at S&P Global Intelligence, also mentioned various factors affecting the supply chain during the briefing, including negotiations with dockworkers on the East Coast and potential additional tariffs that have prompted shippers to move goods earlier.

The Port of Los Angeles has now recorded a year-on-year increase in exports for 14 consecutive months. In July 2024, the volume of loaded exports reached 114,889 TEUs, a 4% increase compared to the previous year. The port also processed 323,431 empty containers, a 54% increase compared to 2023.

Seroka praised the dockworkers for their effective handling of this record volume of cargo. “We are prepared to increase capacity as needed as we approach the second half of 2024,” he added.

This exceptional performance reinforces the Port of Los Angeles‘ position as a key player in global trade and suggests a strong growth trend for the remainder of the year.

Impact of the Pandemic on Container Shipping

The Covid-19 pandemic caused significant changes in container shipping operations, with many containers being stalled at ports or warehouses where they were not needed. As the global economy began to recover, labor shortages and port congestion caused many of these containers to remain trapped where they were not needed. This led to an excess of stored containers in some regions and a shortage in others.

Container Garage