Container shippers have paid a steep price for advancing their peak season shipments this year, as data from Xeneta reveals significant increases in spot rates to major destinations. Between April 30 and July 1, spot rates to the U.S. West Coast surged by 144%, while rates to the U.S. East Coast rose by 139%. North European routes saw an even steeper increase, with rates jumping 166% over the same period.
Peter Sand, Chief Analyst at Xeneta, highlighted that the ongoing geopolitical tensions, including attacks in the Red Sea and broader conflicts in the Middle East, have disrupted the traditional seasonality of ocean supply chains. Shippers and forwarders, eager to avoid the logistical nightmares experienced during the pandemic, moved large volumes earlier than usual, contributing to severe congestion at ports in Asia and driving up freight rates.
Sand noted a “clear correlation” between the record volumes and the spike in spot rates, particularly for shipments to the U.S. and Europe. Many shippers opted to import Christmas goods as early as May, fearing potential disruptions later in the year. Although this strategy helped mitigate future risks, it came at a significant financial cost. “Those shippers who rushed imports may have spent far more than they wanted to, but they clearly felt it was a price worth paying to lower the level of risk in their supply chains later in the year,” Sand explained.
Congestion and Rate Spikes Result from Strategic Pre-Season Shipping
The impact of these early shipments is evident in the latest analysis from Descartes Datamyne, which shows that U.S. import volumes increased by 11.2% from June to July 2024, reaching 2.55 million TEU. This figure represents a 26-month high, surpassing the levels seen during the pandemic-induced congestion and supply chain disruptions of May 2022.
According to Descartes, U.S. imports from China reached a record high of 1,022,913 TEU in July 2024, surpassing the previous peak set in August 2022. The July 2024 volume increase over June is consistent with traditional peak shipping seasons, but it also marks the highest July total in six years, outpacing July 2022 imports by 25,274 TEU.
Despite the significant increase in volumes, Descartes reported that U.S. ports have so far managed to avoid the delays and congestion that plagued the industry during the pandemic. This is a positive sign for the supply chain, suggesting that infrastructure improvements and better preparedness have helped mitigate the impact of higher volumes.
However, Xeneta has observed a decline in spot rates in August, indicating that the peak season may have already concluded. “If we are now seeing spot rates softening in August, that would suggest we have also already seen the peak in demand for ocean container shipping and volumes should be lower in July and August during what would ordinarily have been the peak season,” Sand noted.
This shift in the timing of peak season shipping reflects the evolving strategies of shippers and forwarders as they navigate a complex and uncertain global trade environment. While the early movement of goods has helped avoid potential disruptions, it has also underscored the challenges and costs associated with managing supply chains in today’s volatile market. As the industry looks ahead, the lessons learned from this year’s early peak season will likely influence shipping strategies and rate dynamics in the coming years.
