West Coast shipping rates surge as Red Sea fallout goes global

As Red Sea disruptions intensify, container shipping spot rates are rising on the other side of the globe: for cargo shipped from Asia to the U.S. West Coast.

The Red Sea crisis coincides with drought restrictions in the Panama Canal. Asian cargo bound for East and Gulf Coast ports had previously been switched from Panama to the Suez Canal, and is now being rerouted on even longer voyages around the Cape of Good Hope.

The much shorter route from Asia to the West Coast is looking increasingly attractive.

At 14 knots, a direct voyage from Shanghai to New York via the Cape of Good Hope takes 43 days, according to Sea-Distances.org. A direct voyage from Shanghai to Los Angeles takes only 17 days (plus additional time for cross-country land transport).

The question now is how long Panama and the Red Sea disruptions will persist, giving new strength to Asia-West Coast spot rates.

Annual trans-Pacific contracts generally run from May 1-April 30 and are negotiated in February-April. If trans-Pacific spot rates are supported for months, not weeks, disruptions could push annual contract rates higher.