Shipping’s Surge: Red Sea Crisis Echoes Uber’s Peak Pricing


Last updated: January 22, 2025

container_ship_in_the_portIf you’ve ever tried to get an Uber during rush hour, you know the pain of surge pricing. Now, imagine that on a global scale with shipping. That’s what’s happening as the industry faces a price spike akin to Uber’s infamous surges.

After Iran-aligned Houthi militants fired missiles at ships bound for the Suez Canal, freight rates soared from about $1,200 per trip in 2024 to a January peak of $3,400.

According to Freightos, which tracks spot prices for 40-foot containers on major trade lanes, rates fell briefly in March and April but shot back up to $4,500 by May – more than triple the pre-crisis rates.

This surge seems puzzling. It’s not peak season, and unlike the post-pandemic crunch when rates hit nearly $12,000, there’s no shortage of ships.

The industry has added record capacity, with 2 million 20-foot equivalent units (TEU) delivered in 2024, and another 3 million expected this year, per AXSMarine analyst Jan Tiedemann. Another 2 million TEU will join by 2025.

But several forces are pushing rates higher. Global manufacturing picked up its fastest pace in nearly two years this May, per S&P Global’s Purchasing Managers’ Index.

Port strikes in Germany, France, and potentially the U.S. are also putting pressure on rates. Moreover, exporters are racing to ship goods ahead of rising tariffs.

President Biden announced increased tariffs on $18 billion of Chinese goods, prompting a surge in shipments before the August implementation.

Geopolitical tensions loom large. U.S. allies, including the EU, are under pressure to expand tariffs on Chinese goods.

If Donald Trump returns to office, further tariffs are likely, remembering his previous term’s $300 billion tariff imposition.

The Red Sea closure adds to the turmoil. Rerouting ships around Africa’s Cape of Good Hope adds two weeks to the journey for Asian cargo heading to Europe, requiring more ships to maintain trade flows.

Despite the influx of new ships, idle fleet percentages fell to a low 0.6%, well below the healthy norm of 3%.

This situation is a boon for shipping businesses. Zim Integrated Shipping Services, heavily exposed to spot prices, saw its shares skyrocket over 170% since December.

Denmark’s Maersk, with less spot exposure, still gained 15%. With frequent contract renegotiations and ad hoc surcharges, even companies with lower spot exposure stand to benefit.

Whether this tariff-driven, economic-recovery-fueled surge will last is uncertain. But six months after the Houthi attacks, companies like Hapag-Lloyd show no signs of returning to the Suez route.

Freightos forecasts rates could climb to $9,000 on certain routes in the coming months. Like Uber rides, the balance of supply and demand in shipping is a delicate dance.

As the industry navigates these choppy waters, it’s clear that shipping, much like your ride home, can be unpredictable and pricey.

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About The Author

Venture Smarter | Shipping
Co-Founder & Chief Editor
Jon Morgan, MBA, LLM, has over ten years of experience growing startups and currently serves as CEO and Editor-in-Chief of Venture Smarter. Educated at UC Davis and Harvard, he offers deeply informed guidance. Beyond work, he enjoys spending time with family, his poodle Sophie, and learning Spanish.
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Venture Smarter | Shipping
Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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