After experiencing last year's slump, global commodity trade is showing signs of acceleration, driving up shipping rates and reminding some supply chain managers of the surge in demand for shipping that disrupted international trade three years ago. Emily Stausbøll, senior shipping analyst at freight analytics platform Xeneta, said: “This situation is reminiscent of the chaos and soaring ocean freight rates during the pandemic.” “Shippers have learned the lesson. Some shippers are importing early just in time for the peak season and possible tight capacity.”

The catalyst for the month-long rise in sea freight rates came more from concern than optimism, including concerns about Asian port congestion, North American labor strikes that could hinder port or rail services, and heightened geopolitical tension.

Earlier this year, ocean shipping was already strained due to the tense situation in the Red Sea region. Yemeni Houthi attacks on ships forced shipping companies to bypass southern Africa instead of going through the Suez Canal as before. A.P. Moller-Maersk A/S, the world's second-largest container shipping company, estimates a 15% to 20% loss of capacity on routes from Asia to Northern Europe this quarter.

Importers and exporters in Asia, America, and Europe usually see an increase in shipments between July and September, as retailers look to restock before the back-to-school season, Halloween, and year-end holiday shopping season. Stephanie Loomis, head of American shipping at Rhenus Logistics, pointed out that with the limited capacity of idle containers, a surge in orders seems to be occurring. She said, “This peak season had a major impact ahead of schedule. When I spoke to a number of shipping companies this week, they all said the vessels were fully loaded.”

Container capacity is tight and freight rates are rising

Container freight rates reflect the extent of this tight capacity. Freightos data shows that in the week ending Sunday, freight rates for 40-foot containers from Asia to the west coast of the United States rose 13.4% to $4,915, for the fifth consecutive week. This shipping fee is three times what it was in late December last year, but it is still far below the peak of $20,586 in September 2021. Freight rates for 40-foot containers from Asia to Northern Europe are also rising, reaching $4,882 last week, more than three times higher than a year ago, according to Freightos data.

Judah Levine, head of research at Reightos, said in a research report last week that some shipping companies have announced a further increase in freight rates in June, which means “they don't expect the situation to ease in the short term.”

Hapag-Lloyd AG (Hapag-Lloyd AG), the world's fifth-largest container shipping company, released an operation report last week showing that at Qingdao Port, Shanghai Port, and Ningbo Port, ships only had to wait one to four days to find a berth due to “fleet groups” and bad weather; waiting times for ships in Singapore and Malaysian ports are also increasing.

US container imports rebound from the slump in 2023

Senior shipping analyst John McCown said that in April, container imports from the top ten US ports increased year-on-year for the seventh month in a row, pushing the average increase over the past three months to 19.1%. This is the strongest performance since July 2021, close to the peak of a surge in demand during the pandemic. John McCown said, “Potential economic activity appears to be the driving force behind this strong growth.”

Worries and long-term memories may also play a role. In order to prevent shortages during the pandemic, US companies ordered products and parts far exceeding demand and led to an increase in inventory. Subsequent inventory removal measures have led to a decline in inventory. Furthermore, analysts said that the US government's imposition of tariffs on imported goods may increase the urgency for US companies to stock up on goods now.

Ryan Petersen, founder and CEO of San Francisco digital freight forwarder Flexport Inc., said companies worried about the new US tariffs are importing ahead of schedule so that goods can enter the US before the new tariffs take effect. He also said that the threat of a Canadian railway strike and contract negotiations for workers in the eastern and southern parts of the United States worried companies that do not want to run out of manpower in the second half of this year. He said, “Whether there is a strike or not, the shippers are very nervous. They are worried that if the goods don't reach East Coast ports by September 30, they may miss Christmas.”