Why are container rates rising if demand is cooling?

Carriers are managing supply through blank sailings (canceled departures) and exploiting port congestion created by recent typhoons and the return to the Red Sea route. The shift from longer African routes to the shorter Suez Canal passage is causing vessels to bunch at destination ports, straining terminal capacity. According to Drewry, Asia-Europe blank sailings increased from two in the current week to eight the following week, deliberately restricting available capacity to support pricing.

What is the impact of carriers returning to the Red Sea?

Alphaliner data shows 63 percent of deployed capacity between Asia and Europe is now routing through the Red Sea, with higher penetration on Mediterranean routes (70 percent) than North Europe services (58 percent). While this shortens voyage times, the accelerated schedules create operational mismatches: vessels arrive ahead of their original scheduled windows, causing simultaneous port arrivals and exacerbating existing backlogs from summer storm recovery in Chinese ports.

What labor and geopolitical risks threaten shipping operations?

Approximately 250 port watchmen at LA-Long Beach have authorized a potential strike beginning November 1 if contract negotiations fail. Although representing only 2 percent of the ILWU workforce, the Pacific Maritime Association estimates these workers' employers handle roughly 85 percent of Long Beach cargo and 33 percent of LA cargo. Additionally, Israeli carrier Zim recently announced its return to the Red Sea despite Houthi rebel declarations, indicating uneven carrier confidence in the route's safety.

Are the published rate increases actually sticking?

No. While carriers are seeking November price increases and planning additional blank sailings, European forwarders report discounted offers and have questioned whether higher prices will hold. Freightos noted forwarders are seeing signs of cooling demand and space becoming easier to secure, particularly on trans-Pacific routes where daily East Coast prices retreated after initially jumping 9 percent.

What additional uncertainties exist for late 2024?

U.S. port fees on China-linked vessels are formally scheduled to resume November 10 unless delayed. The White House extended its trade truce with China until early January, but the USTR opened a public comment period on postponing the fees rather than outright suspending them. Additionally, Section 301 investigations into excess manufacturing capacity in China and 15 other countries are expected to conclude by year-end, potentially triggering new tariff regimes with implementation delays extending into early 2025.

Shipping & Freight

High Impact

Container rates surge despite weak demand: Red Sea shift reshapes shipping

Oct 29, 2026

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The signal

Container freight rates on major international routes are climbing despite signs of cooling demand, driven by a combination of port congestion, carrier capacity restrictions through blank sailings, and operational disruptions from recent weather events and geopolitical tensions. Carriers are increasingly returning to the Red Sea, with nearly two-thirds of capacity between Asia and Europe now routing through this passage, though the transition is creating new port congestion challenges as vessels arrive ahead of schedules built around longer African routes.

Asia-North Europe rates rose 3 percent to $3,551 per 40-foot equivalent unit, while Mediterranean rates climbed 8 percent, and trans-Pacific East Coast rates jumped 9 percent to a yearly high of $10,565 per FEU. Supply chain professionals face a paradoxical environment where shorter voyages promised by Red Sea accessibility are being offset by operational inefficiencies at destination ports and persistent carrier tactics to manage capacity and maintain pricing power.

Additional uncertainties loom, including potential labor disruptions at LA-Long Beach affecting 85 percent of Long Beach's cargo and upcoming U.S. trade policy decisions on tariffs scheduled for implementation in November.

#ocean-freight-rates

#red-sea-shipping

#container-congestion

#asia-europe-routes

#trans-pacific-shipping

#port-disruptions

#supply-chain-delays

#shipping-capacity

#suez-canal-alternative

#logistics-costs

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

immediate

What if the LA-Long Beach port strike occurs on November 1?

Simulate a labor stoppage at Los Angeles-Long Beach ports beginning November 1, affecting approximately 85 percent of Long Beach cargo and 33 percent of LA cargo volumes. Assume ILWU members honor Local 26 picket lines, cascading into vessel, yard, and gate operation halts at affected terminals. Model the dwell time increase for containers, demurrage costs, and network diversion to alternative U.S. West Coast ports over a 2-4 week resolution period.

Run this scenario

Simulation Suggestion

this month

What if Red Sea shipping delays extend another 6 weeks due to Houthi escalation?

Simulate a security incident in the Red Sea or Bab el-Mandeb Strait forcing carriers to revert to African circumnavigation routes on 60-70 percent of Asia-Europe capacity. Model the corresponding 2-3 week transit time extension, additional fuel costs, and vessel scheduling disruptions. Assess inventory buffer requirements for importers dependent on Asia-Europe trade lanes and the pricing impact from renewed capacity constraints.

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Simulation Suggestion

this month

What if new U.S. tariffs on Chinese goods trigger demand surges in November-December?

Simulate implementation of new Section 301 tariffs on Chinese goods effective in late November or December, prompting importers to accelerate orders ahead of higher duties. Model the corresponding demand spike on trans-Pacific routes, container availability constraints, and rate pressure. Assess whether carriers can absorb capacity demand or if blank sailings and congestion will intensify.

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Supply Chain Simulation: How It Works and How to Choose Software

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