Container Shipping Approaches Maximum Capacity

At S&P Global’s annual Transpacific Maritime Conference (TPM 24) last week, shipping executives spoke about how the Red Sea conflict has affected containerized ocean shipping. To avoid the Red Sea’s dangers, shipping lines have rerouted around the southern tip of Africa since mid-December 2023. This extra mileage increases transit time and operational costs; puts upward pressure on freight rates; and forces carriers to use every possible vessel to maintain weekly service in major trade lanes. At TPM 24, one chief executive officer (CEO) of a supply-chain consulting firm described the situation as a “challenge,” but not a “crisis.” The ocean container carriers entered 2024 with a surplus of vessel capacity that was quickly absorbed by the challenges currently facing the system. The same CEO noted, “We are at maximum capacity right now. Another major problem could launch us into pandemic-like problems.” On average, approximately 9 percent of U.S. grain exports are moved in containers each year—of that amount, distillers’ dried grains and soybeans make up the majority.