Shipping analysts say ocean freight traffic is poised to remain at a high level through the end of the year; containers could become scarce in North America.
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The article first published at Recycling Today
Snarls in global supply chains caused by COVID-19 and accompanying restrictions at the start of this decade led to speculation about a less globalized commercial landscape and a potential rebound in manufacturing in the United States and other nations with developed economies.
While some reshoring has taken place, Norway-based shipping consulting firm Xeneta AS reports demand for ocean freight container shipping hit an all-time high this May, with 15.9 million TEUs (20-foot-equivalent-unit containers) shipped globally.
According to Xeneta, the ocean freight sector has been more hectic than many observers anticipated before the year started. “Back in the fourth quarter of last year, 2024 was looking to be a freight buyer’s market, but a lot can change in a small amount of time,” writes the trio of authors who contributed to a new mid-year report from Xeneta.
Some of the increased traffic is tied to longer, multi-leg journeys required for containers that formerly could be shipped directly. “Instead of being a demand issue, 2024’s chaos centers around capacity,” writes Xeneta. “Namely, container ships diverting around the Cape of Good Hope rather than transiting the Red Sea. This means more shipping capacity is required to transport the same number of containers.”
With attacks in the Red Sea ongoing, Xeneta writes, “In the first four months of 2024, each container shipped globally was being transported 9.3 percent farther on average. This generated a global increase of 18.3 percent in TEU miles.”
Continues the firm, “While increased sailing distances would be enough to have a significant impact on the market in isolation, the number of containers being moved is also increasing in 2024. This more traditional demand measurement shows growth during the first four months of 2024 of 8.2 percent compared to the same period in 2023.”
For recyclers who ship materials as a backhaul (common in the United States and Europe), the Xeneta report may contain some good news as far as their rates are concerned.
The consulting firm says average spot rates on “fronthaul” routes, such as China to the U.S., are now more than 300 percent higher compared with December of last year.
Continues the firm, “It should also be noted, not all trades have seen spot rate increases. For instance there have been flat, or even declining, rates on some backhaul and secondary trades. This situation can change as the impact of the Red Sea situation spreads across other global trades.”
In its July 2024 monthly report, Germany-based Container xChange, a freight technology services provider, says container shippers with merchandise leaving China and Vietnam are experiencing some of the highest rate increases.
“While we might see a peak in July followed by a reduction in freight rates due to easing congestion and reduced demand, the ongoing conflict in the Middle East and potential new disruptions, such as labor strikes, could prolong these challenges,” says Christian Roeloffs, CEO of Container xChange.
One shipping industry executive quoted by Container xChange foresees a shortage of empty containers looming in North America, based in part on Asian shippers calculating they are better off immediately bringing back empty containers before they leave their port of destination.
“Based on this [circumstance], the lack of containers in some cities in North America is inevitable, which will drive up the sales price of containers,” says Tony Yu of Baiscon Shipping Line Hong Kong Co. Ltd.
A Container xChange staff member in the U.S. says some container sellers in North America have held on to inventory, anticipating higher prices later, while some buyers have held off for the opposite reason.
