Red Sea Disruption Drives Up Container Leasing Rates

Container ship

Published Feb 14, 2024 12:53 PM by The Maritime Executive

The capacity constraints created by the Red Sea security crisis have raised container shipping rates on Asia-Europe and Asia-U.S. East Coast routes, with knock-on effects on other lanes - and the leasing rates for empty boxes are rising too, according to Container XChange. Core China-U.S. routes are particularly affected. 

The container brokerage reports that box capacity is getting tied up by the long transit around the Cape of Good Hope, which increases voyage times by 10 days or more. According to the firm's tracking, average container lease rates are now triple what they were a year before, and much of the increase has happened since Yemen's Houthi rebels began attacking shipping in the Red Sea. 

The firm's contacts also report that the disruption is indeed shifting more cargo to the U.S. West Coast, as previously reporteds. "Many importers are already rerouting cargo via West Coast transloading and trucking across to the [East] coast, adding pressure on railways and domestic carriers," one California forwarder shared with Container xChange. 

A healthy Western consumer economy is contributing to positive sentiment in the leasing market, according to the firm. American appetite for goods increases the demand for containers in China. 

"The gains in consumer spending and retail sales figures suggest that our industry can expect decent demand recovery for goods, which translates into relatively higher container demand on the cards," said Christian Roeloffs, cofounder and CEO of Container xChange. "However, we do expect that these rates will cool off post-Chinese New Year."