The global shipping industry is facing a new wave of challenges due to a recent surge in demand for ocean containers. According to the shipping consultancy Xeneta, May 2024 saw a new record with nearly 16 million TEUs (20-foot containers) shipped, and the cumulative total for the first five months of the year has already surpassed 74 million TEUs.

Rate Increases on Key Routes

This surge in demand has led to a dramatic rise in freight rates. Some routes from Asia have experienced increases of up to 300% since December 2023. For example, the global Drewry rate, which was $1,600 per 40-foot container at the end of last year, has now skyrocketed to $5,900. On the Shanghai-New York route, costs have soared to nearly $10,000 per container.

Geopolitical and Operational Factors

These rate increases are further exacerbated by geopolitical and operational issues. Attacks in the Red Sea have forced ships to take longer routes, such as via the Cape of Good Hope, adding ten days to voyages and significantly increasing costs. Additionally, threats of strikes at U.S. East Coast and Gulf Coast ports are creating a “perfect storm” that is deeply concerning for companies.

Impact on Customers

To mitigate risks, international moving companies enter into agreements with various shipping lines. However, as a small number of companies control 50% of the market, price negotiations are complicated, leading to an increase in the final cost of their services.

Situation in Southeast America 

Starting August 1, 2024, ocean carriers imposed a $2,000 per container surcharge for shipments from ports in eastern South America to North America, the Caribbean, and other South American ports. In addition to that, MSC has just announced a new increase of $1,000 per container for October. These factors must be considered in upcoming quotations and shipments. 

Ports around the world are under pressure. In some port terminals, port operations are restricted; in others, the waiting time for berthing vessels can extend from 7 to 9 days. In some cases, the delay is up to 2 months to secure space on vessels, in addition to frequent rescheduling. 

The port of Buenos Aires, in particular, often suffers from the omission of ships that choose not to call here, forcing the re-coordination of cargoes that were scheduled to be loaded on those vessels.

Short-Term Outlook

With freight rates doubling in recent weeks from Southeast America to the U.S. and a 40% increase to the Caribbean and Central America, demand is expected to continue to grow over the next 6-8 weeks, exacerbating the situation.

International movers are facing significant challenges in negotiating with global carriers. While the impact on operations is substantial, collaboration and flexibility will be crucial to overcoming this crisis. Companies must be prepared to adopt alternative plans and work together to minimize disruptions in the supply chain.