According to Xeneta’s container shipping market update released on September 18, container spot rates from the Far East to the U.S. West Coast and U.S. East Coast have increased 324% and 325% respectively since the end of February. Xeneta Chief Analyst Peter Sand noted that rates are now just 18% and 11% below the record levels reached during the pandemic.

Several factors are contributing to the rise in pricing. According to Drewry, carriers have withdrawn capacity in the form of blank sailings ahead of China’s Golden Week holiday, helping support elevated freight rates, ShippingWatch reported. At the same time, rising bunker costs have increased fuel-related surcharges, adding further upward pressure on pricing.

Sand said the possibility of rates exceeding pandemic-era highs cannot be ruled out. “If a freight rate record is broken, it is most likely to occur on the trade into U.S. East Coast, but even if we do not see a new all-time high, the fact we are even discussing the possibility demonstrates how sensitive critical ocean container shipping trades are to geopolitical forces and how a regional conflict in the Middle East can have major implications at a global level.”

Ongoing disruptions in key maritime corridors continue to add pressure to global supply chains. According to the International Maritime Organization (IMO), security concerns in the Strait of Hormuz, Red Sea, Gulf of Aden, and Black Sea continue to affect vessel safety, energy flows, commodity markets, and global supply chains. Secretary-General Arsenio Dominguez said since the onset of the Middle East conflict on February 28, the IMO has confirmed 80 incidents targeting international shipping in and near the Strait of Hormuz.

While ocean carriers have blanked sailings to maintain rate levels, Xeneta reported that additional capacity has been deployed on the Far East-U.S. East Coast trade to capitalize on strong demand and attractive rates levels. “Carriers are seizing the opportunity while the market is hot, adding capacity into U.S. East Coast ahead of what could be a turn in the market within the next two to three weeks. Offered capacity on the Far East to U.S. East Coast trade is 6-7% higher in September than in August,” Sand said.

Xeneta said it expected another round of increases as shippers accelerate shipments before factory closures associated with Golden Week. “We should expect one more freight rate push at the start of October as shippers rush cargo out of Asia ahead of the Golden Week shutdown, before rates start to soften, or at least the pace of growth will slow,” Sand pointed out.

Separately, Port of Los Angeles Executive Director Gene Seroka noted that while recent freight market dynamics have favored U.S. East Coast routings, ongoing restrictions at the Panama Canal have prompted some cargo volumes to return to West Coast gateways.

Source: Xeneta, ShippingWatch, International Maritime Organization