An image showing tow orange shipping containers from the ground up.

Container Rates Surpass $5,000

Image from Aron Yigin for Unsplash

The costs of shipping a container across the sea have now reached levels unheard of since the COVID-19 pandemic. A worrisome sign that global supply chains will suffer even further ahead of this year’s peak season.

Last week, Drewry’s World Container Index (WCI), which measures the average cost of shipping a forty foot container across the main trade routes in the world, recorded a historic high value of $5,318. This means that, given the current market, if you wished to ship a forty foot container right now, it would cost you, on average, $5,318 to do so. This, of course, doesn’t mean that every shipping company is paying such fees at the moment. In fact, large shippers often sign contracts with carriers well ahead of time to protect themselves from these eventualities. But, as shippers and carriers prepare to renegotiate contracts for the coming year, these high prices might soon take a toll on their budgets—more so since, current disruptions are unlikely to end in the near future.

This is the eight consecutive week in which Drewry’s WCI has reported an increase, and the second time in the last year that shipping prices have grown tremendously. The rise has been drastic to say the least. Just in the last eight weeks—since prices then began to grow—, average shipping rates went from $2,725 per 40ft container, to $5,318—that is, over a 195% increase in the span of two months. Year to year, the growth is even more radical, with shipping prices being 355.96% higher today than the same week in 2023.

Drewry World Container Index (2022-2024)

A line chart showing the average cost of shipping a 40ft shipping container between 2022 and 2024

(Data from Drewry)

A number of different factors are contributing to this drastic increase in prices. Chief amongst them are a series of bomb attacks led by Houthi rebels in Yemen across the Red Sea. These attacks have effectively blocked access to Europe through the Suez Canal, forcing shipping companies to re-route through the Cape of Good Hope, adding between 16 and 32 days to transit times. Not to mention that, as a result, large container ships have begun taking hold of Western European ports to transition their loads to smaller feeder vessels. These ports, in turn, are not accustomed to such high levels of traffic and, in turn, have increased wait times across the Mediterranean Sea.

But Houthi attacks are just one of many disruptions across the globe. The Panama Canal—a crucial artery connecting the Pacific and Atlantic oceans—continues to struggle with historic droughts that have decreased the number of vessels that can cross the canal in a given day. Meanwhile, a recent rise in US tariffs against China has gotten shippers to expedite loads from Asia to the US in hopes of avoiding the tariffs before they come into effect. All this while the major unions representing port workers in the US prepare to strike if they fail to reach a new contract agreement in the fall, and pirate attacks remain a latent problem across the world—although more so in Southeast Asia.

If we further disaggregate Drewry’s index, we will soon notice that all shipping routes have been equally affected by these drastic trade disruptions. By far, the most impacted trade segment was that connecting Asia to Europe as a result of Houthi attacks, with the price of sending a 40ft shipping container rising by 235% in the last eight weeks. This is followed by the price of shipping a container from Shanghai to LA (197.95% increase in price), and that of shipping from Shanghai to Genoa (191.07% increase). The highest price is now to ship a container from Shanghai to New York, costing $7,827—a price that has grown 178.62% over the last eight weeks.

Change in Transportation Costs for Shipping Containers

A bar graph showing the cost of shipping a 40ft shipping container along key trade routes in the world, comparing the prices between May 2nd and June 27th of this year.

(Data from Drewry)

What’s most worrisome is that these trends are happening weeks away from the beginning of shipping peak season, as companies around the world bulk order products ahead of Black Friday, and the holiday season. Given the nature of most disruptions, it is unlikely they will cease by the time peak season begins, which, in turn, will push the price on containers even higher. 

For the time being, the world continues to suffer from supply chain disruptions that are raising the overall costs of commerce. If nothing changes in the near future, the costs of international trade, are likely to increase as we’ve seen in recent week.s.