TEU

A standard unit of measurement in the shipping industry used to measure cargo capacity based on a 20-foot-long container.

A Twenty-Foot Equivalent Unit (TEU) is the standard unit of measurement used in the shipping and logistics industries to quantify cargo capacity. It is based on the physical dimensions of a standard 20-foot-long shipping container. This standardized metric allows shipping lines, port operators, and analysts to measure the carrying capacity of container vessels and the throughput of marine terminals consistently, regardless of the actual physical mix of container sizes. For maritime and logistics investors, TEU volumes and average freight rates per TEU are critical operational metrics. They directly dictate the top-line revenue potential of container shipping lines and port operators. By tracking changes in average revenue per TEU, investors can assess global trade demand, shipping capacity constraints, and the pricing power of shipping companies during different economic cycles. When analyzing shipping stocks, a rising TEU volume combined with stable or increasing freight rates typically signals strong global demand and healthy economic activity. Conversely, falling TEU volumes or declining rates per TEU can indicate overcapacity or an economic slowdown. Investors must watch for supply-side risks, such as an oversupply of new container ships entering the market, which can depress rates even if absolute TEU volumes remain high.

A shipping company reports that it carried 1,500,000 TEUs during the quarter at an average freight rate of $1,590 per TEU. The total container shipping revenue is calculated as: 1,500,000 TEUs $1,590 per TEU = $2,385,000,000 (or $2.385 billion).