Global shipping demand has hit a record high. Is this good or bad?

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Global demand for sea container shipping hit a record high in May amid soaring spot freight rates and severe port congestion, according to data released by Xeneta and Container Trades Statistics (CTS).

In May, container shipping volume reached 15.94 million TEU, exceeding the record of 15.72 million TEU set since May 2021. Additionally, cargo volumes from January to May were just under 74 million TEU, an increase of 7.5% compared to the first five months of 2023.

Emily Stausbøll, senior shipping analyst at Xeneta, said: “With more containerized cargo than ever now being carried by sea due to conflicts in the Red Sea and severe port congestion in Asia and Europe, with available capacity affected by diversions across Africa, global shipping networks are able to cope with tight supply chains. It’s amazing how many containers are transported under such circumstances.”

The surge in demand was mainly driven by container exports from the Far East, with China's exports reaching a record high of 6.2 million TEU in May, accounting for 39% of global container trade. This surge has driven a sharp increase in spot freight rates, with the latest data from Xeneta showing that the average spot freight rate from the Far East to the US West Coast reached ,840 per FEU on July 9, a 200% increase since April 30.Rates to the U.S. East Coast increased by 130% to ,550 per FEU, while rates to Northern Europe and the Mediterranean increased by 148% and 88% to ,030 and ,830 per FEU respectively.

In addition, Stausbøll also pointed out: "Given that we have already seen record-breaking freight volumes in May ahead of the traditional peak season in the third quarter, shippers are worried about whether the volume will be reduced during the traditional peak season. Moreover, spot market prices continue to rise, There are no signs of an end to the conflict in the Red Sea and congestion at Asian and European ports will take time to ease. While market demand will remain high in the coming months, record volume levels will certainly not be maintained.”