Top 30 Ocean Carriers 2024: Still navigating disruptive seas

Ocean container shipping continues to navigate rough seas. The Red Sea crisis, port congestion and demand created by an early peak season have resulted in a capacity crunch for carriers and a rise in rates for shippers. Compounding this are geopolitical tensions, regulatory uncertainties related to the upcoming U.S. elections, and persistent disruptions in global trade lanes—it appears to be one thing after another.

“And let’s not forget the risk of port issues at U.S. Eastern and Gulf ports, and Panama Canal water shortages,” says Philip Damas, managing director of Drewry Supply Chain Advisors. “The list of shipping disruptions—actual or potential—is longer than it was in previous years.”

Yet, overall, the industry has demonstrated resiliency and an ability to adjust to the challenges.

Shipping lines responded to the Red Sea crisis by diverting ships, adjusting schedules and building and reorganizing their equipment and networks—despite extensive costs associated with increased transit times and operations.

Alphaliner's Top 30 

(Data captured Sept. 2024)

Source: Alphaliner
All information above is given as guidance only and in good faith without guarantee. 
Data captured September, 2024.

“The container shipping market has been one of the many industries that benefited from the market volatility caused by innumerable disruptions in global trade, geopolitical uncertainties, wars, and trade regulatory environment,” says Christian Roeloffs, cofounder and CEO of Container xChange.

However, a cloud remains over the industry. The ongoing situation in the Red Sea, which began late last year, continues to be a significant issue.

Transiting the Cape of Good Hope adds approximately 10% more time for ships’ voyages—and, subsequently, more costs. “Ocean shipping continues to face delays and extra costs caused by these disruptions,” says Damas.

Consequently, carriers have faced gaps between departures and cancelled sailings, which has resulted in the need to deploy more vessels to maintain scheduled weekly capacity. “This increased market volatility adds to price pressures which we’ve been witnessing since the beginning of 2024,” adds Roeloffs.

The congestion factor

Seaport congestion, such as been witnessed in Singapore and Colombo, has added pressures to primary trade lanes from Asia.

“And congestion is not as predictable and can add pressure to an already fragile system,” says Spencer Shute, senior consultant at Proxima.

Stefan Verberckmoes, an analyst at Alphaliner, describes the situation as similar to what happened during the pandemic. “More ships have been needed, particularly on the China-India to Europe-US East Coast routes,” he says. “As a result, rates have gone up, although not as high as during the pandemic.”

Port congestion led to a surge in spot ocean freight rates between last December and early July, rising three-fold to $7,000-$9,000 on the Asian routes, Drewry reports.

Average weighted spot and long rates out of the Far East

“Spot rates appear to have peaked in July and are now on their way down,” says Damas, adding that earlier this year, most companies negotiated year-long contract rates at much lower levels than spot rates—and these contract rates remain in place. “But carriers have since imposed peak season or other unexpected surcharges on contract shippers, sometimes running in excess of $1,000 per container.”

While the flow of goods has generally stabilized along the South African route, it continues to strain capacity. “To accommodate longer transit times, additional vessels and containers are required, putting pressure on container availability,” says Shute. Consequently, carriers have enforced surcharges on Asian routes.

Rates have especially surged on key routes like China to the U.S. For example, rates from Shenzhen to Long Beach increased by 85% in July, reports Container xChange. “This surge is influenced by both strong demand in Asia and anticipatory moves by retailers ahead of the peak season,” says Roeloffs. “However, if demand doesn’t rebound strongly, we may see some downward pressure on rates later in the year.”

According to Damas, carriers have even announced surcharges on the trans-Atlantic route. Consequently, exporters and importers in the Drewry benchmarking club have had to battle with carriers to keep the surcharge increases as low as possible.

To curb these surcharges, Shute advises shippers to select the correct container size and fully utilize container space. He explains that costs associated with the new routes are no longer associated with “disruption,” but are being driven by expenses associated with longer transits. “This shift explains why we’ve seen container rates come down slightly, though remain elevated,” he says.

A survey by Container xChange of around 1,000 U.S.-based container traders finds that “as we enter the third quarter of 2024, 78% expect container prices to continue rising in the coming weeks, driven by election uncertainty and potential labor strikes. Only 14% foresee a decline, while 8% expect prices to remain stable.”

The bottom line, according to Roeloffs: “This indicates a broad expectation of continued volatility in the U.S. container trading environment.”

Peak season

As always, peak season plays a big role in increased demand for containers—and higher rates.

“Ocean carriers are having a great peak season,” says Damas. “Volumes and rates are generally higher than expected, and higher than last year. And continued shipping disruptions have created temporary bottlenecks and postponed the return of over-capacity in shipping.”

However, Roeloffs finds that in today’s environment, increased demand isn’t necessarily a reflection of strong consumer demand. “Instead, retailers pulled forward their orders to avoid potential delays,” he says.

Anne-Sophie Fribourg, vice president of global ocean freight procurement at London-based freight forwarder Zencargo, maintains that the early and strong restocking demand that began in the middle of April resulted in a record 16 million TEUs shipped in May. “Prior to that, the record was 15 million TEUs in May 2021,” she says.

Retail sales indicate that real consumer demand hasn’t seen a significant spike. “A lot of indicators in this context suggest that inventories are higher than demand, and, resultantly, retailers and importers will therefore have ample time to restock before their next cycle,” says Roeloffs.

For shipping, however, this indicates that the demand for containers is fragile. “It may not be sustainable in the long run, unless there’s a meaningful increase in consumer demand to support it,” says Roeloffs.

Shute notes that in mid-August, rates remained elevated as shipping volume ramped up, with the U.S. experiencing one of its highest import months on record in July.

Exports from China to North America and North Europe

“Rates have been easily three times as high was as one year ago,” says Verberckmoes. He surmises, however, that if peak season lasts into China’s Golden Week holiday in early October, rates will go down along with diminished capacity demands.

“In fact, rates will come down very fast,” adds Verberckmoes. “The fourth quarter is traditionally the weakest quarter for carriers for volumes.”

Roeloffs surmises that the industry’s outlook remains uncertain, with potential fluctuations depending on how these factors evolve in the coming months.

“First, there’s a gradual correction in supply and demand that should stabilize rates in the latter half of the year,” says Roeloffs. “On a longer term, the more profound change is the ongoing trend toward regionalization and smaller trade networks, which intensified in 2021. This shift has gained even more importance as geopolitical conflicts become a regular consideration in risk resilience strategies.”

The black swan

The upcoming labor negotiations on the U.S. East and Gulf Coasts in the third quarter and the Canadian rail strike that occurred in late August add another layer of potential volatility.

“We can expect another spike in rates as shippers reroute volume to the West Coast in an attempt to avoid disruptions,” Shute says. The impact will be acute for industries reliant on rail and port operations.

“For example, the Port of Vancouver, where two-thirds of cargo is moved by rail, would face severe delays and congestion if rail operations were halted,” says Roeloffs. “Similarly, U.S. ports on the East and Gulf Coasts could see major disruptions during the peak season, affecting retailers as they prepare for the holidays.”

In response, companies like Hapag- Lloyd and CMA CGM are already implementing contingency plans, such as diversion fees and rerouting vessels, to mitigate the impact.

“These proactive measures highlight the anticipated severity of the strikes,” says Roeloffs. “For businesses, the strikes could lead to increased volatility in freight rates, driven by supply chain bottlenecks and capacity constraints.”