Sudden container crunch sends ocean freight rates soaring, setting off global trade alarm bells

A perfect storm in global trade is creating a shipping container capacity crunch, fueling a sudden and surprise spike in ocean freight rates.

The beginning of peak shipping season, coupled with the longer transits to avoid the Red Sea, and bad weather in Asia, have hit the flow of trade on key routes. Ocean carriers are skipping ports or decreasing their time at port, and not picking up empty containers, in an effort to keep vessels on track for delivery.

The supply chain cost issues come at a time when consumer goods for back to school and the holidays are set to be moved on the water.

"From the Far East into the U.S. West Coast, it is likely spot rates will surpass the level seen at the height of the Red Sea crisis earlier this year, which demonstrates how dramatic the recent increases have been," said Emily Stausbøll, senior shipping analyst at Xeneta.

Xeneta ocean freight rates show the rallying spot market and the widening spread between spot and long-term rates. "The bigger the spread between long and short term rates, the greater the risk of cargo being rolled, which we know is already happening," she said. 

Spot rates had fallen after the sharp rise triggered by Red Sea tensions in early 2024, but since the end of April they began spiking by as much as $1,500, on average, on routes to the U.S. coasts, and now some of the highest contract rates charged by shippers are over double the rates of just a month ago.

Stausbøll said this will bring back memories of the chaos caused by lack of available capacity during the Covid-19 pandemic. "Similarly to back then, some freight forwarders are now being pushed to premium rates to secure space guarantees," she said.

Early Xeneta data suggests rates will increase further at the