The container shipping industry is experiencing unprecedented changes as record-breaking capacity and unexpected rate increases signal potential disruptions in the near future. According to analyst Xeneta, capacity from the Far East to North Europe is projected to reach an all-time high in mid-April, surpassing the previous record set in November 2021 during the pandemic, which was 336,800 twenty-foot equivalent units. Simultaneously, average spot rates on this route have risen by 4.8%, reaching $2,457 per forty-foot equivalent unit.
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The Mediterranean route has also seen a significant increase, with rates jumping 6.8% to $3,270 per FEU. This unusual combination of increased capacity and rising rates during a typically slack period has sparked speculation about tariff impacts on trade flows. Xeneta’s chief analyst, Peter Sand, suggests that shippers may be redirecting goods from the Far East to Europe, avoiding the United States, where tariffs on some Chinese imports have reached 245%.
While the Far East to Europe routes are experiencing rate increases, other major trade lanes are showing different trends. Year to date, all fronthaul trades have seen significant rate decreases, ranging from 20% for North Europe to U.S. East Coast to 50% for Far East to U.S. West Coast. This comes as carriers announce general rate increases and surcharges to stabilize prices.
Adding complexity to the market dynamics is port congestion in North Europe, affecting ports such as Antwerp, Le Havre, London Gateway, and Hamburg due to factors like weather, crane maintenance, and labor unrest. Sand warns of potential “carnage” when the record capacity from the Far East arrives in North Europe, given the average transit time of 55 days. “As we saw in 2021, congestion is toxic for ocean container shipping and can quickly spread across global supply chains,” Sand noted.
