Fuel price changes drive freight cost shifts

The global shipping industry is navigating a period of structural transformation, with fuel price stabilisation providing temporary relief even as longer-term challenges from decarbonisation mandates and geopolitical route disruptions reshape trade economics.

Container freight rates, which surged to record levels during the 2021-22 supply chain crisis, have normalised but remain above pre-pandemic levels on major routes. The Asia-Europe corridor now averages US$1,850 per TEU, compared to US$1,200 in 2019. Transpacific rates have shown more volatility, influenced by seasonal surcharges and capacity adjustments by major carriers.

The Liner Shipping Connectivity Index (LSCI), which UNCTAD calculates quarterly for more than 170 countries, shows diverging trends. Small island developing states (SIDS) in the Pacific and Caribbean saw LSCI improvements as shipping companies added capacity to serve growing tourism-related cargo. However, landlocked developing countries continue to face the highest effective freight costs as a share of import value.

Red Sea route diversions, which began in late 2023 following security incidents, have added an average of 12 days to Asia-Europe transit times and increased fuel consumption by 15-20% on affected routes. The resulting increase in effective fleet capacity utilisation has provided unexpected support for container freight rates.

UNCTADstat's container port throughput data shows that global port handling capacity grew by 4.2% in 2024, led by expansions in Asian hubs including Shanghai, Singapore, and Busan. This capacity addition is expected to exert downward pressure on freight rates as the industry absorbs new tonnage.

Datasets used in this analysis