Containers Costs Reach New Highs

An image showing an upwards trending line on top of various green shipping containers. Around them, some trucks are moving additional containers.

It’s been a tough couple of weeks for the logistics industry as shipping rates for containers have reached a drastic high without any signs of decreasing in the near future.

In the span of four weeks, the average cost of transporting a 40ft shipping container jumped from $2,706 to $3,511—a 29.7% increase in less than two months. In a world run by TEUs, this is a grim sign for the future. With this pattern comes an end to a 14 week period of steady decline after the Drewry World Container Index (WCI) reached a high of $3,964 per container earlier this year—the first time since 2021 the index approached  the $4,000 mark. While neither number is close to the pandemic-induced high of $10,083 per container, it is a worrisome sign to see such volatility in the maritime transportation sector.

Drewry World Container Index (2023-2024)

A line graph showing the value of the Drewry World container index between June 2023 and May 2024
(Data from Drewry

This increase in costs is fairly constant across the world. In routes connecting Asia to Northern Europe, we noticed a growth rate of 25.6% just in the first two weeks of march. Routes connecting Asia to Mediterranean ports saw a slightly smaller increase of 22.1%—albeit still highly relevant. Across the Atlantic, rates connecting Asia to the US West Coast grew by 24.6%, while those in the East Coast grew by 23.35%. All to say, the entire world seems to be struggling with higher import costs.

Change in Transportation Costs for Crucial Shipping Routes (2024)

A bar graph showing the increase in costs of transporting a 40ft container across various trade routes according to the  Drewry World container index between May 2nd and May 17th 2024.
(Data from Drewry

There are at least two forces that are pushing this drastic increase. First—and perhaps most importantly— Houthi rebels continue to disrupt trade in the Red Sea and have threatened to expand their reach to the Mediterranean—although at Auba we recently analyzed the feasibility of those claims and found mixed evidence to them

This, in great part, explains why Asia-Mediterranean routes saw the largest spike in container costs. The Red Sea and the Strait of Bab el-Mandeb—both neighboring Houthi territory—are crucial arteries to global trade, representing the single fastest route connecting Asia with the Mediterranean through the Suez Canal. Recently, in our Auba Map of Choke Points, we estimated that over 8% of vessels crossing through the most important areas to maritime trade were concentrated on the Red Sea. Given Houthi attacks, nine out of ten large vessels headed to Suez are now taking a longer route through the Cape of Good hope drastically increasing costs.

Auba Choke Points Map

A world map showing the main choke points to maritime trade by different circles, with their size indicating the number of vessels that cross a route annually and their color indicating the level of disruption.
(Data from Auba Research)

The second driving force to this drastic increase in container costs is more closely related to the rise in costs when transporting to the US West Coast—usually, the main entry to Chinese merchandise. While there is no choke point between the two points, the Biden administration recently announced a drastic increase in tariffs to a number of Chinese goods including electric vehicles and batteries. This, in turn, is likely to deter companies from sending goods to the US, causing an immediate shock to Asia-US routes.

Put together, the rise in US tariffs and the Houthi-induced choke point at the Red Sea are likely to blame for the spike in transportation costs. At Auba, we will continue motoring the events closely and update our Alerts based on new developments.