Record Container Shipping Demand Amid Red Sea Conflict

• In June 2024, container shipping from China to North Europe reached an unprecedented 800,000 TEU, while North America saw its highest June volume ever at 1.36 million TEU.
• The surge in shipping volumes coincided with a sharp rise in spot rates, which increased by up to 166% for North Europe and over 140% for US coasts between April and July.
• Recent data suggests that the record demand may have peaked, with spot rates showing signs of softening as volumes are expected to decrease.

In June 2024, container shipping from China experienced record-breaking volumes amid global disruptions, particularly due to the ongoing conflict in the Red Sea. The data reveals that shipments from China to North Europe surged to 800,000 TEU, marking the highest monthly total ever recorded for this trade route. Similarly, container volumes from China to North America reached 1.36 million TEU, making it the highest June figure ever and placing it as the eighth-highest month on record, reports Xeneta.

Red sea conflict

Peter Sand, Chief Analyst at Xeneta, attributed this surge to shippers’ efforts to protect their supply chains from the impact of the Red Sea conflict. With the uncertainty surrounding global trade routes, importers expedited their shipments to avoid the potential chaos seen during the COVID-19 pandemic. This preemptive action led to unprecedented volumes being shipped earlier in the year, ahead of the traditional peak season.

The increased demand for container shipping had a notable impact on freight rates. Spot rates for trades from the Far East to the US West Coast and East Coast surged by 144% and 139%, respectively, from April to July, while rates to North Europe climbed by 166%. This sharp increase in rates reflects the heightened urgency among shippers to secure their goods amidst global uncertainties.

However, there are indications that the peak in demand may have already occurred. Since July, average spot rates from the Far East to both US coasts and North Europe have begun to soften, suggesting a potential easing in demand. Peter Sand noted that if this trend continues, it could signal a decrease in shipping volumes as the traditional peak season approaches.

In summary, the unprecedented demand for container shipping observed in June 2024 underscores the significant impact of global disruptions on supply chains. As the situation evolves, shippers may need to navigate fluctuating rates and volumes, adjusting their strategies in response to ongoing market changes.