A continuous rise in global shipping and container rates is causing concern in Western and Eastern markets across the globe.

Led mainly by tight capacity, strong demand, and the ongoing disruption in the Red Sea, rates are approaching record highs seen during the COVID-19 pandemic.

This week, shippers and forwarders in Brazil reported that they are seeing container freight rates continue to surge on northbound trades to the U.S., Central America, and the Caribbean.

Forwarders say rates have already doubled since mid-June and show little sign of easing until November or December, if not later.

One source told the Journal of Commerce that rates have reached $5,000 to $6,000 per FEU, “depending on how late you try to book.”  

“Freight rates are rising drastically,” Fabrizio De Paulis, managing director of Brazil forwarder De Paulis Logistics & SCM Eireli, told the Journal of Commerce. “There’s been a capacity shortage in July, with many vessels sold out, especially Maersk services.” 

Highlighting the boom in Brazilian exports to the U.S., the U.S. Census Bureau reported that goods worth $17 billion were imported into the U.S. from Brazil in the first five months of the year, up from $14.6 billion in the same period last year.

“Space on the Brazil-USEC trade lane has become very critical over the last few weeks, and all the main carriers operating on this route — Hapag-Lloyd, MSC, Maersk, and CMA CGM — have been increasing their rates,” Mauricio Fisch, director of Brazil forwarder Ocean Express, told the Journal of Commerce. 

“If forwarders want a booking without having a service contract with some carriers, they must book the quick spot option at a much higher rate. Otherwise, they have to wait four or five weeks for a booking,” Fisch added. 

Europe and Asia

A similar situation is occurring on European and Asian routes as the Red Sea disruption continues, with Houthi rebels targeting ships linked to Israel, the U.S., or Britain as part of their support for the militant group Hamas in its war against Israel.

According to authorities, this has reduced transit in the Suez Canal by nearly 50% since December 2023, resulting in a reduction of around 40 vessels per day.

Consequently, there has been a 70% increase in vessels navigating the less direct Cape of Good Hope, which increases the distance traveled by 40% and adds delays of two to five weeks.

Rural News Group from New Zealand reports that as the World Trade Organisation predicts a 2.6% increase in exports for 2024, the global shortage of shipping containers and congestion at some Asian ports, is raising the cost of trade. Rates in the region have nearly doubled in the last three months. 

On the positive side, the outlet says the current rise in shipping costs is expected to be less inflationary than the surge experienced during Covid-19 as container production, largely driven by demand to move exports from China to the West, has increased substantially over the last few months.

Additionally, the disruptions experienced in the Panama Canal appear to be easing. Although a much smaller chokepoint than the Suez Canal, it still accounts for around 7% of global seaborne trade. The 'Panama Problem' was caused by an extended drought in 2023 that reduced the number of vessels able to use the canal and led to draught limits that reduced operating weights.

Currently, water levels in Lake Gatun, the main body of water that feeds the system, have been rising steadily since April, meaning that by early August, up to 34 ships per day will be able to use the canal. This is a major increase on the 24 vessels per day that had access at the start of the year and not far behind the more typical 36-28 vessels that use the canal in normal times.