A major global trade inflation indicator has a negative trend, just as Federal Reserve, the U.S. Economy, and Consumer Prices are getting good news about inflation. Wholesale prices have also slowed down. Forecasts warn that ocean cargo rates could reach $20,000 – or even the Covid era high of $30,000 – and stay there until 2025.

According to CNBC Supply Chain Heat Map, spot ocean freight rates from Far East to U.S. increased between 36%-41% in a single month. Ocean carriers also increased general rate increases of approximately 140%. These costs have pushed the price of a forty-foot cargo container up to around $12,000.

“This index data confirms the data we see from our data, and what shippers are telling us,” said Paul Brashier. He is vice president of global logistics for ITS Logistics. The lack of containers overseas and the limited vessel capacity has forced shippers on to the spot market in order to find equipment for loading out at origin. “This is driving rates to levels that have not been seen since the post Covid crisis two year ago,” he said. Brashier said that the congestion at port terminals is due to long dwell times, and that empty containers for loading with goods are scarce.

Goetz Alebrand is the head of ocean freight for DHL Global Forwarding Americas. He said that he does not believe that freight rates will drop anytime soon.

Alebrand said that it was unlikely the situation would be resolved soon, and that rates for ocean freight might not drop before Chinese New Year.

Test the peak Covid container rate of $30,000

Sea-Intelligence published a note on Thursday predicting that Asia-Europe spot price could exceed $20,000 due to the Red Sea Crisis — the Houthi Rebels have been increasing attacks against ships in recent times — and the increase of nautical miles traveled.

“The pandemic established a precedent that freight rates per nautical miles can reach very high levels during times of severe distress,” said Alan Murphy CEO, Sea-Intelligence.

According to the Defense Intelligence Agency report on the impact of the Houthis Red Sea attacks container shipping through the Red Sea has declined by approximately 90% from December 2023 to mid-February. Alternative shipping routes around Africa add approximately 11,000 nautical mile (one to two week of transit time) and add approximately $1 million in fuel costs per voyage.

Sea-Intelligence data suggests that if the rate per nautical mile reaches a level similar to the one paid during the pandemic period, spot rates could reach $18,900 for a forty-foot-long container from Shanghai-Rotterdam, $21,600 for a forty-foot-long container from Shanghai-Genoa, and even $21,200 on the back haul from Rotterdam-Shanghai. Murphy said that spot rates will continue to increase as long as enough shippers are willing to pay. “This means, although it’s unlikely that spot rates will rise beyond the levels during the pandemic period but it’s by no means a guaranteed.” He said that on the Transpacific Route (Asia-U.S. West Coast/East Coast), extrapolation of maximum spot rates would be identical to those during the pandemic, when some rates were as high as $30,000.

Peter Boockvar is the chief investment officer of Bleakley Financial Group. He said that the global economy has entered a new world where inflation is volatile, despite the fact that the Fed’s recent comments and the Consumer Price Index data for the U.S. show progress in disinflation. Boockvar noted that the recent spike in ocean shipping and air rates is a reminder. “We’ve seen how easily goods prices can be reversed upward in the past. “Higher rates for longer periods are real.”

Shippers are frustrated at the sudden change in pricing for supply chains. Nate Herman is the senior vice president for policy at the American Apparel and Footwear Association. He wrote in an email in May that the market was low, with container bookings falling by 48%, and there was ample supply, with vessel capacity increasing 2.6%. “But yet carrier general rates have exploded, with up to a 140% increase!” Shippers are paying high rates because of schemes that ignore contracts.

Prices and demand for air freight are increasing

According to Xeneta’s freight intelligence, the spot rates for air freight from China to North America increased by 43% in May, reaching $4.88 per kilogram. Global air cargo spot prices were up 9% on an annual basis in May to $2.58 per kilogram.

The air freight market is affected by increased demand. In a recent client note, Xeneta stated that the global air freight market is “on a path to double-digit volume growth in 2024 after a +12% jump year-on-year in demand in May.”

Companies that are


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Air freight is the preferred method of transport for semiconductor companies and Chinese retailers Temu & Shein.

Daniel Ives is the managing director and senior equity analysts at Wedbush Securities. He said that if costs continue to rise through the summer, this will increase the price of Apple and chip products, which will be passed on to consumers and end users. “This is a critical time as iPhone 16 ramps up towards mid-September.”

Niall van de Wouw (Xeneta’s chief airfreight officer) told CNBC that spot air cargo rates from China to the U.S. soared in 2024. This was primarily due the unprecedented boom in ecommerce demand through companies like Shein and Temu.

Van de Wouw said that disruptions in ocean container services could also have an impact on air freight. “Given 98% of world cargo is transported by ocean, a 0.2% shift in percentage would result in a 10% increase of air freight volumes. This shows how air freight is sensitive to disruptions on the oceans.

He said that while global spot rates rose 9% year-over-year in May, not all major trade routes around the world are experiencing this level of rate increases. Trade from Europe to North America experienced a 21% rate decline.

The CNBC Supply Chain Heat Map shows the disconnect between ocean freight costs and demand. This is unlike the pandemic, when ocean freight was driven by consumer insatiable buying and a shortage of containers and vessels.

According to FreightWaves SONAR ocean freight data, container bookings from shippers and freight orders to ocean carriers have decreased by 48% from month to month. Ocean carriers cancel vessel sailings, and 37% of ocean bookings. This creates a tighter container market, which increases the price. The longer transits across the Red Sea further reduce container availability. The route around Cape of Good Hope restricts container availability, and artificially reduces the pool of containers available.

The historic run is shown by Xeneta’s data on ocean freight rates between the Far East and U.S. East Coast ports, West Coast ports, and Gulf Coast port.

Brashier stated that there is evidence that smaller ocean carriers are repositioning their vessels and booking charters to capture the higher revenue. He said that this could pose two major challenges, which his company is closely monitoring. First, a large number of containers will enter North America through ports and ships that shippers may not be familiar with. The increased number of ships bringing cargo into traditional gateways could overwhelm the current supply chain.

Port delays can create a “bunching effect” similar to the vessel arrivals which caused port congestion during pandemic. DHL warned clients of the ongoing port congestion in key China and Southeast Asia. Singapore has been plagued by congestion for weeks. Ships have to wait an average of seven days before they can enter the port. DHL reported that waiting times had also increased across all major Chinese port regions. Shanghai and Qingdao experienced the longest delays.

According to Linerlytica, a container shipping market intelligence firm, the increasing congestion in ports has caused the immobilization of approximately 2 million TEU, or nearly 7% of fleet.

Brashier said that this could pose significant challenges to shippers. Navigating the large number of peak season containers into North America earlier and on a larger number of ships may cause port congestion. The arrival of smaller vessels can cause congestion in the ports.

“Are you operating in an environment similar to Covid without the actual presence Covid?” It feels like it. “Several niche carriers have recently entered into the market,” Jon Monroe, of Jon Monroe Consulting, wrote in a recent report about smaller carriers that offer expedited services.

DHL recommends that clients pre-book their freight four to eight weeks before the scheduled departure date to reduce the risk of the freight being rejected and to ensure timely service.

Concerns about the East Coast and Gulf Coast

The suspension of contract negotiations could lead to higher prices on the West Coast. This is due to the suspension of contract talks by the United States Maritime Alliance, which represents the ports. The fear of an ILA walkout in the fall prompted logistics managers to accelerate the timeframe for importing holiday goods in order to ensure that the items were in warehouses by the September 30th contract deadline.

In a statement released on Wednesday, ILA president Harold J. Daggett warned that “the threat of a coastwide strike on 1 October 2024 is becoming more probable as USMX, and its member companies, continue to drag their heels.”

Gene Seroka is the executive director of the Port of Los Angeles. He says that only a fraction of containers have been diverted to his port to mitigate risks. These range from the Red Sea, to the Panama Canal, to the ILA/USMX negotiation. The port’s container imports in May were down 3% compared to last year, but exports have now reached a new milestone with 12 consecutive months of growth. Seroka told CNBC that since the announcement, “we have heard nothing.” “During these talks, there are a lot of stops and starts. I don’t think this is unusual.”

This week, talks were suspended over union allegations that Maersk’s APM Terminals and Maersk were using automation against the master contract. “Companies such as Maersk try to eliminate ILA positions with automation, while realizing billions in profits,” Daggett said. “They’re in for a rude wake-up call.” It is now our time and the ILA will insist that our ILA longshore worker get a big raise in their wages.

Maersk stated in a press release that it is in full compliance with ILA/USMX’s master contract. It also expressed its “disappointment” that the ILA chose to make certain details of ongoing negotiation public in order to gain additional leverage to support their other demands. Maersk stated that it will continue to engage all stakeholders, including ILA, in order to address their concerns.

Jared Bernstein of the United States Council of Economic Advisers said that the Biden administration was closely monitoring the port union negotiations due to the economic impact of a strike and is encouraging both parties to negotiate in good-faith.

Bernstein said, “Our administration encourages collective bargaining because it is a proven method of achieving results.” “The president knows it works. He is the first President to walk the picket lines. He supports collective bargaining but also gives the parties the space and time they need when they are at this stage.