Global demand for ocean freight container shipping reached an all-time high in May 2024, driven by soaring spot rates and severe port congestion. This unprecedented demand, coupled with diversions around Africa due to the Red Sea conflict and congestion in Asia and Europe, has created significant pressure on ocean supply chains.
Record-Breaking Demand
In May 2024, the volume of container shipping hit a record 15.94 million TEU, surpassing the previous record of 15.72 million TEU set in May 2021. The surge was primarily driven by increased exports from the Far East, especially China, which accounted for 39% of global container trade in May. The year-to-date volumes reached nearly 74 million TEU, marking a 7.5% increase compared to the first five months of 2023.
Soaring Spot Rates
Spot rates have experienced dramatic increases, with average rates from the Far East to the US West Coast rising by 200% since April. Rates to the US East Coast, Northern Europe, and the Mediterranean have also seen significant hikes. The continuous climb in spot rates, coupled with the ongoing conflict in the Red Sea and persistent port congestion, has heightened concerns among shippers about the impact on peak season volumes in Q3.
Increased TEU-Miles
The diversion of shipping routes around the Cape of Good Hope has led to a 17.9% increase in TEU-miles globally in 2024 compared to the same period in 2023. This reflects the longer distances each container travels due to the Red Sea conflict. If carriers had continued using the Suez Canal, the increase in TEU-miles would have been 8.6%. This significant rise underscores the real capacity squeeze in the market, exacerbating the impact of record-breaking shipping volumes and port congestion.
These factors collectively highlight the unprecedented strain on the global ocean freight market, with record demand, escalating spot rates, and increased shipping distances reshaping the industry landscape.
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Source: XENETA
