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June saw record-breaking container shipping demand between China and North America and North Europe
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High demand was driven by shippers trying to get ahead of supply chain disruptions closer to the holiday retail season
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A record 800,000 twenty-foot equivalent units moved from China to North Europe in June
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For the same month, China-North America trade volumes reached 1.36 million TEUs
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The record volumes in June coincided with rising average spot rates on trades from the Far East to the US and North Europe
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Record levels of demand for container shipping may have peaked as average spot rates from Asia to US West and East Coast ports dropped since July 1
Ocean container shipping demand from China to North America and North Europe continued to break records in June as importers rushed to protect supply chains amid the global disruption caused by conflict in the Red Sea.
According to data from Xeneta and Container Trades Statistics, 800,000 TEUs were shipped from China to North Europe in June, the highest ever monthly figure on this trade.
On the other hand, China-North America trade volumes were 1.36 million TEUs in June, based on Xeneta data, representing the eighth highest month on record, trailing only the extraordinary volumes shipped at the height of the Covid-19 pandemic disruption in late 2020 and 2021.
Ocean container shipping demand was driven by shippers trying to get ahead of supply chain disruptions closer to the holiday retail season in America.
“Conflict in the Red Sea has brought a major shift in the traditional seasonality of ocean supply chains, with concerned shippers rushing to import as many goods as they can earlier in the year,” said Xeneta chief analyst Peter Sand.
“Shippers assessed the impact of the Red Sea conflict on ocean supply chains and are not prepared to take the risk of repeating the chaos of the pandemic years – meaning we have seen record-breaking volumes on major fronthaul trades out of China ahead of the traditional peak season in Q3,” he added.
Red Sea shipping route attacks by Houthi rebels saw vessel operators taking longer routes around Africa, affecting China port traffic and pushing up rates – ultimately causing supply chain disruptions worldwide.
The record volumes in June coincided with rising average spot rates on trades from Asia to the US and North Europe.Xeneta data showed spot rates into the US West Coast and US East Coast soared 144% and 139% respectively between April 30 and July 1.
Spot rates surged 166% into North Europe during the same period.Xeneta’s Sand explained the correlation between record volumes and rising freight rates. “Shippers wanted to protect supply chains and that has come with a heavy price tag. The massive volumes shipped in May and June contributed to the severe congestion seen at ports in Asia and the dramatic spike in rates.
“Those shippers who rushed imports may have spent far more than they wanted to, but they clearly felt it was a price worth paying to lower the level of risk in their supply chains later in the year. We have seen shippers importing Christmas goods as early as May because hindsight is a luxury they do not have – they needed to take immediate action,” Sand said.
There are signs the record-levels of demand for container shipping from China to North America and North Europe may have peaked. Average spot rates from the Far East to US West Coast and East Coast are now softening, having fallen by 17% and 3.2% respectively since July 1.
Average spot rates from the Far East to North Europe have held a little stronger, but have now fallen slightly by 1.6% since July 31.
“If we are now seeing spot rates softening in August, that would suggest we have also already seen the peak in demand for ocean container shipping and volumes should be lower in July and August during what would ordinarily have been the peak season,” Sand said.
