Record High Demand for Ocean Freight Container Shipping in May

12 Jul Record High Demand for Ocean Freight Container Shipping in May

Global demand for ocean freight container shipping reached an unprecedented peak in May, as indicated by data from Xeneta and Container Trades Statistics. The month saw the transport of 15.94 million TEUs, surpassing the previous record of 15.72 million TEUs set in May 2021. Year-to-date volumes have approached 74 million TEUs, reflecting a 7.5% increase compared to the same period in 2023.

Emily Stausbøll, Senior Shipping Analyst at Xeneta, remarked, “The surge in containerized goods transported by sea coincides with constrained capacity due to diversions around Africa stemming from the conflict in the Red Sea and significant port congestion in Asia and Europe. This convergence of factors has created a challenging environment for ocean supply chains, leading to the disruptions witnessed in recent months.”

The notable increase in demand is primarily attributed to record exports from the Far East, with China alone exporting an unprecedented 6.2 million TEUs in May, which constituted 39% of global container trade. As of July 9, average spot rates from the Far East to the US West Coast had escalated to USD 7,840 per FEU, marking a 200% rise since April 30. Meanwhile, rates to the US East Coast surged by 130% to USD 9,550 per FEU, and rates to Northern Europe and the Mediterranean climbed by 148% and 88%, reaching USD 8,030 and USD 7,830 per FEU, respectively.

Stausbøll further emphasized the concerns voiced by shippers, stating, “The record volumes in May, occurring ahead of the traditional peak season in the third quarter, have understandably raised alarms. With spot market rates continuing to rise and the Red Sea conflict showing no signs of resolution, coupled with ongoing congestion in Asian and European ports, we anticipate a prolonged period of pressure on supply chains.”

The combination of heightened demand and extended sailing distances around the Cape of Good Hope has resulted in a 17.9% increase in global TEU-miles in 2024 relative to the same timeframe in 2023. This growth is primarily driven by the necessity of Red Sea diversions and longer shipping routes. In contrast, had carriers utilized the Suez Canal, the increase in TEU-miles would have been a more modest 8.6%.

Stausbøll concluded, “Earlier this year, the rise in ocean freight spot rates led to speculation about whether there was a genuine capacity shortage or if the market was overreacting due to the Red Sea conflict. The current data clearly demonstrates that the squeeze on capacity is significant, and underscores the extent of the potential oversupply that could have existed in 2024 had the situation in the Red Sea not unfolded.”