Spot Rate Surge (6/10/25)

Steve DeNunzio

You’ve found it! The “Milestones: Behind the Freight Podcast”. Your one-stop shop for news and views on what’s happening in logistics this week. I’m your host, Steve DeNunzio, Professor of Logistics at THE Ohio State University!

Ellie Thornton

And I’m Ellie Thornton, trusty sidekick and foil!

Steve DeNunzio

So, here's where we kick off today—an 88% spike in Trans-Pacific spot rates. Yes, you heard me right, 88%. Shippers are paying astronomical rates to move goods from the Far East to the US East Coast. These rates have jumped up to sixty one hundred dollars per FEU. And don’t get me started on the West Coast where prices are topping five thousand dollars. It’s, uh, absolutely—

Ellie Thornton

Insane, yeah? I mean, who’s got that kinda cash lying around? But here’s the thing—Steve, get this—a friend of mine works with a small fashion retailer in London, right? They’re scrambling to buy freight space just to get their summer line in before the season's, like, over. They’re actually paying more for shipping than some of the clothes are worth! And, they’ve still got customers yelling for bikinis and sandals. Wild, isn’t it?

Steve DeNunzio

Yeah, wild... but unfortunately, it’s becoming the norm in these trade corridors. Think about it—businesses like your friend’s are being forced to accept these prices just to stay competitive. This acute surge is a result of the temporary US-China tariff pause, creating what’s essentially a ninety-day window of opportunity. Now, liner operators like Cosco, Hapag-Lloyd, Evergreen—they’re capitalizing on this frenzy. Some have, apparently, pushed their rates as high as three thousand dollars more per FEU. And honestly, it raises a big question: how long can this keep going?

Ellie Thornton

Right, yeah, and it’s kinda like carriers hold all the cards. Businesses need the goods, carriers jack up the rates… lather, rinse and repeat. But here’s the thing—what happens when this bubble bursts? Shippers don’t just, like, forget how much this cost, do they? Are we gonna see long-term changes or is this, y'know, just a summer fling with high prices?

Steve DeNunzio

Potentially both, Ellie. Right now, shippers are in a “do whatever it takes” mindset. But, as Xeneta’s Chief Analyst Peter Sand pointed out in his statement, this spike is temporary. Supply chains settle, inventories recover, and when that happens, rates drop. It’s basic economics, really.

Ellie Thornton

But Steve, what’s not basic is these ripple effects, right? Like one spike over here and next thing you know, prices on the Far East to North Europe are up 32%. Even markets that aren’t directly tied to the US-China tariff mess are… what’s the phrase? Feeling the burn?

Steve DeNunzio

Precisely. But not the Bernie Sanders "feel the burn". Global supply chains are interconnected ecosystems. We talk about that in class. What happens in one lane impacts others, whether it's through diverted capacity, shifting demand, or pure market psychology. Honestly, it’s fascinating to watch… from an academic standpoint, of course.

Ellie Thornton

Yeah, fascinating, sure. But it’s a living nightmare for small businesses trying to keep pace. My mate said they’re literally, like, cutting corners on marketing just to afford freight costs. They’re betting the farm that stock arrives in time to sell. Mess up, and, well, game over.

Ellie Thornton

It’s wild how interconnected this all is, right? One domino tips, and the whole supply chain feels it. Like this ninety-day tariff pause—sure, it’s a window of opportunity, but barely enough time to rebuild anything. It’s like trying to plan a summer holiday when the clock’s already ticking. How’s anyone supposed to navigate that?

Steve DeNunzio

Honestly, Ellie, it’s not much to work with. What it does is set off this mad rush. Shippers hit the panic button, thinking, “We’ve got ninety days to make this count.” And what happens? Rates skyrocket, because everyone’s fighting for the same limited capacity. It’s déjà vu of the early 2020s all over again.

Ellie Thornton

Oh, you mean like when people were smuggling masks and sanitizer? That chaos?

Steve DeNunzio

Exactly. I remember people trying to manage inventory back then Ellie, and let me tell you—it was carnage. You’d have shipments delayed by weeks, sometimes months. And when things finally arrived, half the items were either obsolete or out of season. It’s not so different now; it's just, well, fancier goods—running shoes instead of respirators.

Ellie Thornton

Right, but running shoes don’t scream “life-or-death,” do they? So, why Steve are businesses acting like the world’s ending if they don’t move boxes fast enough?

Steve DeNunzio

It’s about staying competitive Ellie. Miss your shipment, lose your edge. That's why they pay these exorbitant rates—what Xeneta’s analysts would call “desperation pricing.” You’re essentially buying time, and time, as they say in business, is money. But again, the central question is

Ellie Thornton

Yeah yeah I know—are these prices here to stay, or is this just another shipping industry rollercoaster? What’s your take, professor?

Steve DeNunzio

Well, as Peter Sand points out, it’s likely temporary. Once capacity normalizes, supply catches up, and rates should—should—come down. But

Ellie Thornton

Ah, there it is. The professor’s famous “but!” Spill it Steve.

Steve DeNunzio

But, the market doesn’t always behave predictably. See, global supply chains aren’t just influenced by tariffs or capacity—there’s geopolitics, alternative route development, even market sentiment. And when those factors converge, we get these wild, uh, ripple effects. Take Far East–North Europe for example—

Ellie Thornton

Yeah, wait! That’s the thing, right? Prices on that route are, like, what, up 32%? And this isn’t even their mess to deal with? How’d they get dragged into this shipping soap opera?

Ellie Thornton

Okay Steve, so ripple effects—Far East–North Europe rates are spiking, even though tariffs technically aren’t their circus. How tangled are these markets anyway? Let’s hear it.

Steve DeNunzio

Well Ellie, supply chains are, uh, incredibly interlinked. It’s not always a direct cause-and-effect relationship, but when something big happens in one lane—like these tariff pauses and rate surges—it shifts capacity and demand across the board. Imagine you’re at a crowded pub, and someone shouts “drinks are on me!” Everyone rushes over, yeah? But that just creates chaos elsewhere, like stressed servers or people spilling drinks everywhere.

Ellie Thornton

Yeah, except instead of spilled beer, it’s missed shipments, right? Got it. But that’s where tools like that, uh, what’s it called? Drewry’s Container Freight Portal? That's meant to help shippers deal with this madness, right?

Steve DeNunzio

Exactly. Tools like the Container Freight Portal give businesses real-time visibility into rates and availability, so they can make informed decisions. It’s not a silver bullet, but in volatile markets, any insight can be game-changing. And Drewry’s work with ports and shippers is key here—they help stakeholders adapt rather than just react. If shipping’s a rollercoaster, they’re the ones designing seatbelts and harnesses.

Ellie Thornton

Oh, I love that—seatbelts and harnesses. But here’s where it gets messy, Steve. Small businesses? They can’t all afford fancy data tools or advisory services, can they? What’s the strategy for surviving this connected, chaotic system?

Steve DeNunzio

Honestly Ellie, it’s a two-part approach. First, resilience—you’ve gotta build that into your entire strategy. Diversify suppliers, routes, even storage options when possible. Second, collaboration. Small players need to band together, creating buying pools or leveraging shared networks. It’s about finding strength in numbers.

Ellie Thornton

Right, but tell that to my friend frantically shipping bikinis. She’s not thinking resilience; she’s thinking, “How do I not lose this season?” I reckon, even with all this prep, timing’s still everything, huh?

Steve DeNunzio

It is. In logistics, timing and adaptability win the race. And these ripple effects, as frustrating as they are, also highlight opportunities. New tech, better forecasting tools, innovative partnerships—we’re seeing a real shift toward smarter, more interconnected supply chains because of these pressures

Ellie Thornton

Of a shift that’s making everyone a bit dizzy, but hey, progress isn’t always smooth sailing is it. Alright, final thoughts, professor. Where does this crazy freight ride take us next?

Steve DeNunzio

Well Ellie supply chains will keep evolving. Rates will stabilize as capacity normalizes, but the lessons of this volatility? They’re here to stay. Businesses—and markets—will need to balance agility with resilience. And that’s going to define the future I think.

Ellie Thornton

Right, agility and resilience. Got it. Well, that’s it for us today folks! Thanks for listening to “Milestones: Behind the Freight Curtain.” And Steve, always a pleasure to pick your brain!

Steve DeNunzio

Likewise, Ellie. And to our audience—stay grounded, stay adaptive. We'll catch you next time!