The continued increase in freight rates is due to severe congestion at ports in Asia.

Written by Elif Şahinduran –

Written by Esra Ersöz –

After returning at the end of May, freight rates continued to rise for another week in early June, almost reaching their highest level since September 2021. Routes from China continue to lead the recent surge due to congestion at major ports in Asia, especially in Singapore reaching a critical level.

The global container index has increased by 12% to $4,716 per 40-foot container in the past week and rose by 181% compared to the same period last year. Since the beginning of May, Drewry’s composite index has increased by a total of 60%.

Accumulated profits on major routes from China are much higher, with the route to Northwest Europe increasing by 94% to $6,032 per 40-foot container, while Southern Europe increased by about 80% to reach $6,664. When it comes to routes to the US, the West Coast increased by 77% to $5,975 in the past week and the East Coast increased by 64% to $7,214 per 40-foot container.

Congestion at Asian ports leading to bottlenecks.Reduced capacity due to blank sailings, unpredictable schedules, and increased delivery times due to route changes have led to severe port congestion in Asia, especially in Singapore. Available goods are being diverted to specific ports as many shipping lines reroute their shipments amidst the ongoing Red Sea crisis, causing congestion at ports like Shanghai-Ningbo in China, Port Klang in Malaysia, and Singapore. According to a maritime consultancy firm, congestion at the world’s second-largest container port, Singapore, reached critical levels by the end of May with delays of up to 7 days. Some shipping lines have skipped planned calls to Singapore by about 10 days, while recent reports indicate a slight easing of the high tension.

Meanwhile, other Asian ports continue to grapple with increasingly severe congestion, with Port Klang and Tanjung Pelepas in Malaysia still bearing heavy workloads. Major ports in China, specifically Shanghai and Xiamen, are also experiencing prolonged delays. Ships are waiting up to 5 days to dock at the busiest port in the world, Shanghai, where congestion levels have reached their highest since the onset of the Covid pandemic, according to Linerlytica.

Not only Asian ports but also Jebel Ali in the UAE are struggling with congestion due to its strategic location adjacent to the Red Sea and its key role in transporting goods through Dubai via both sea and air routes, as reported by Bloomberg.The early arrival of the peak season in the shipping industry is also contributing to congestion. Market participants believe that the peak season, which usually starts later, has come after recent challenges.

Freight rates continue to rise due to severe port congestion in Asia

Early peak season; market maintains growth

Concerns about capacity shortages amid rerouting and empty voyages, increasing congestion at some ports, growing demand from Europe and the US, and stable exports from China have led to an early peak season in the shipping industry. Global freight transport indices continue to rise weekly and it seems that the upward price trajectory will be sustained for a while.

Concerns about trade barriers with China, especially in the case of Trump’s re-election in November, are also causing tension in the industry. Chinese exporters are flooding Western regions with much cheaper goods out of fear of losing market share, causing the peak season in the shipping industry to arrive early. In fact, the significant increase of 7.6% compared to the same period last year after a 1.5% increase in April, also exceeded expectations despite ongoing trade tensions. This confirms the high demand of Chinese exporters for container shipping.