US-China Container Leasing Costs Triple Amidst Red Sea Crisis

Global shipping rates increased following the Red Sea crisis, with China-US container leasing rates tripling within three months. The expectations of container demand recovery reportedly align with the US economy’s resilience, as GDP increased by 3.3% in Q4 2023.

December’s personal income and spending reports reflected lower inflation and strong household spending, bolstering the economic outlook. The Port of Los Angeles recorded a 38.6% increase in TEU volumes, indicating a growth in China’s need for ocean container freights to the United States.

There was an apparent shift in the dynamics of supply and demand because of the 2-3 week increase in travel time via the Cape of Good Hope. Freight rates from China to North America’s east coast doubled between 15 December last year and 19 January this year, hitting about $ 5,000.

While the higher leasing rates might benefit the shipping lines temporarily, the sustained elevated costs may squeeze the profit margins for exporters and manufacturers in the long run.

Reference: timber.exchange

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