Container rate surge enters longest stretch since the pandemic

The spot rate for shipping goods in containers to Europe from Asia rose for a ninth straight week, the longest stretch of rising prices since the pandemic disrupted global supply chains in 2021.

The rate for a 40-foot container to Genoa, Italy, from China hit $7,029 over the past week, the highest level since September 2022, according to the Drewry World Container Index released Thursday. The cost to Rotterdam increased to $6,867. Both rates have essentially doubled since April.

For the busy trade route from Shanghai to Los Angeles, the rate rose for a seventh straight week, to $6,441.

While not all freight is moving at such elevated prices, the spot market for containers reflects the supply of available space on ships and the demand from importers. That balance has tightened during the past six months as vessels avoid the Red Sea, where Houthi rebels have attacked commercial traffic, including a bulk commodity carrier that sunk earlier this week.

Most container lines are taking the longer route around southern Africa, creating disruptions similar to those two or three years ago. Ryan Petersen, founder and chief executive officer of Flexport Inc., said "we're right back almost to where we were during the peak Covid situation." He's seeing spot rates even higher than the numbers Drewry just reported.

"Right now, if you want to ship a container from China to here in the UK it will cost you about $10,000 unless you have a contract," Petersen said during a Bloomberg Television interview in London on Thursday. "And by the way, most of those contracts that were signed at lower prices are not being honoured and they're adding surcharges to them."

Petersen said it's hard to predict how long shipping prices will keep climbing, noting that carriers spent some of their record-high profits made during the pandemic on new vessels that are entering service through 2026, which should help ease the latest capacity crunch.

But he also said uncertainty about delivery reliability later this year is worrying some companies and motivating them to order now rather than wait. Among the threats is a dockworker strike at ports along the US East and Gulf coasts, which Petersen said might send container rates above their pandemic highs if cargo bound for those gateways is significantly disrupted.