Container freight rates - statistics & facts
Container freight rates have increased substantially on most trade lanes in the past three years amid the COVID-19 pandemic. Based on aggregated data for all trade lanes, shipping a 40ft container in March 2023 cost around 3,162 U.S. dollars, around double that when compared to just a year before. The price, however, peaked in January 2024, when shipping for a 40ft container cost roughly 3,964 U.S. dollars.
The container shipping market has not seen such high freight rates since 2008, when a severe economic crisis hit the global economy. While the events triggering the current hike in freight rates differ from the ones causing the 2008 surge, they all expose the interconnected nature as well as the vulnerabilities of the global supply chain.
There is no guarantee the current situation will last much longer: the COVID-19 pandemic seems to be getting under control, and port congestions are expected to ease up during 2022. However, due to the ongoing Russian-Ukraine war and rising oil prices, the price of bunker fuel is expected to surge, possibly continuing to drive freight rates up in the coming weeks and months.
Causes of rising freight rates
The global supply chain is a fragile system consisting of numerous links that must function properly for the whole system to work. The COVID-19 pandemic proved to be a disruption of such proportions to either bring to halt whole industries and supply chains, or severely reduce their efficiency. Container shipping, with its complexity and transcontinental nature, was especially affected by the COVID-19 pandemic and still continues to be to this day. Various events, such as port closures due to coronavirus outbreaks, port congestions, shortages of labor, a lack of new shipping containers, as well as the continuing rise in the price of bunker fuel, continue to make business rather difficult and unpredictable. Moreover, imports from Asia to the United States increased by around 40 percent in 2021, compared to 2019, while the volume of exports stayed roughly the same. As a result of all these factors, carriers have not been able to fully utilize their capacity and meet the demand for container shipping, driving freight rates to record levels.Implications for the future
While manufacturers and consumers bear the increasing costs of shipping, container carriers are reporting increasing profits. In the third quarter of 2021, main container shipping companies had an average operating profit margin of over 56 percent, up from some 3.7 percent just two years earlier. Many carriers are using these profits to increase their carrying capacity by buying new containers and ordering new container ships. Since building a container ship takes around 18 months, delivering these newly ordered ships will take several years.There is no guarantee the current situation will last much longer: the COVID-19 pandemic seems to be getting under control, and port congestions are expected to ease up during 2022. However, due to the ongoing Russian-Ukraine war and rising oil prices, the price of bunker fuel is expected to surge, possibly continuing to drive freight rates up in the coming weeks and months.
