Impending disruptions cause rising rates in container shipping

Global container shipping is seriously considering disruptions on several fronts for this year. For instance, the moment Donald Trump takes office as the 47th president of the United States is feared. His announcement to soon significantly increase import duties on foreign products ensures that container tariffs between China and the US are currently among the highest in the world.

Ahead of his presidency Trump has signaled his intention to impose a 60% duty on Chinese goods. According to UK maritime research firm Drewry, the consequence is that US companies are already ordering goods en masse from China to escape the expected sharp increase in duties.

This raise in orders, in turn, also leads to more demand for container transport. As a result, transport rates from Shanghai to the east and west coasts of the US are currently rising sharply. The Dutch business newspaper Het Financieele Dagblad reports that the daily price of transporting a large container between Shanghai and Los Angeles went up 7% in a week. Cost: $4829.

Impending port strike on east coast US

And there is another factor driving up prices: a looming strike at US east coast ports. Port workers thus want to agitate against the automation of terminals desired by their employers. Therefore, to get ahead of disruptions, companies are now trying to quickly move goods through ports on both the east coast and the Gulf Coast.

Piracy in the Red Sea

Things are also happening elsewhere in the world, such as the ongoing piracy by Houthi rebels in the Red Sea. It forces shipping companies to abandon the Red Sea and the Suez Canal and sail via the Cape of Good Hope. As a result, they do spend much longer in transit. And that takes capacity as well as money, which keeps rates high. In two months, for instance, the Drewry World Container Index rose 26% to $3905.

Overcapacity in container shipping

And then there is the issue of ship capacity. During the corona pandemic, shipping companies ordered many new ships to meet the sharply increased demand. Some of those ships are now in service, but many more are on the way. Overcapacity is feared. Especially once the piracy in the Red Sea is over, this could also cause major problems in container shipping.