What pushed spot container freight rates up in 2024
Rerouting due to the Red Sea crisis was a major factor.
Ongoing geopolitical tensions are the primary reason why volatile freight rates have become the new normal across all shipping segments, particularly fuelling the spike in spot container rates throughout 2024.
In its latest review of maritime transport, the United Nations Trade and Development (UNCTAD), a major factor that affected freight rates at least in 2024 was disruptions caused by the Red Sea crisis.
“Rerouting via the Cape of Good Hope extended voyage times, reduced effective capacity and increased operating costs, driving spot and charter rates to near COVID-19 peaks by mid-2024 before moderating by the end of the year,” the report read.
For instance, the Shanghai Containerized Freight Index, a key benchmark for spot rates on containerised shipments from Shanghai to major global destinations, averaged 2,496 points in 2024. This rects a 149% increase from the 2023 average.
The index peaked at 3,600 points in mid-2024, its highest level since the global logistics crunch of 2021–2022 triggered by the COVID-19 pandemic. This increase was reflected across major trade routes.
Volatility continued into 2025 amidst tariff announcements by the US and mounting geopolitical risks, including around the Strait of Hormuz.
Aside from the impact of the Red Sea disruption, global cargo volumes also grew more than anticipated in 2024, further constricting vessel availability and maintaining high freight rates. This growth was driven by trade between North America and other regions, particularly Asia, as well as by the continued expansion of South-South trade between Asia and developing economies in Africa, Latin America and the Middle East.
UNCTAD noted that demand in the container shipping market grew 7.1% 2024 from a 1.5% contraction in 2022 and stagnation in 2023. On the supply side, global container shipping capacity grew by 10.1% in 2024, equivalent to nearly 3 million twenty-foot equivalent unit (TEU), the highest annual growth since 2008.
“Much of the new tonnage was absorbed by increased demand from longer voyages due to Red Sea rerouting and broader economic activity. Consequently, the additional capacity did not immediately drive rates lower; instead, it continued to support elevated spot freight rates,” the report said.
By the end of 2024, spot container freight rates eased from midyear peaks but stayed well above levels observed before the onset of the Red Sea crisis in December 2023.
UNCTAD said container demand projections for 2025 remain uncertain amidst growing geopolitical tensions and trade policy shifts. On the supply side, container fleet capacity is still growing as new ships ordered during the post-COVID-19 period of booming earnings continue to be delivered.
Port congestion also contributed to high freight rates last year, driven by factors including the disruption to shipping operations in the Red Sea, weather-related challenges in Asia and the Caribbean, and labour issues in the United States and Europe.
“These elements were in addition to infrastructure bottlenecks and operational inefficiencies, and a general surge in container cargo volumes. Such conditions placed significant strain on port operations, leading to increased turnaround times and delays,” UNCTAD said.
“The resulting congestion reduced the effective supply and timely deployment of vessels, diminishing available shipping capacity and reliability. This, in turn, exerted upward pressure on freight rates,” it added.
