Container rates up 50%, air cargo benchmark 25% higher

Renewed tensions in the Middle East linked to U.S. operations facilitating vessel transits through the Strait of Hormuz are continuing to affect container and air cargo markets, although freight impacts remain below levels seen during previous global disruptions.

According to the report, U.S. naval support enabled two U.S.-flagged vessels to transit the Strait earlier this week. However, Iranian attacks on commercial and naval vessels, subsequent U.S. responses, and missile and drone strikes on the United Arab Emirates have increased the risk of renewed conflict despite the current ceasefire.

The report noted that the current U.S. operation is unlikely to fully reopen the Strait, limiting any major increase in global oil supply.

For ocean freight, elevated bunker prices continue to pressure carriers, although fuel shortages remain limited. Weak seasonal demand is also reducing the effectiveness of Emergency Fuel Surcharges and General Rate Increases.

Transpacific container rates increased 2 per cent to the U.S. West Coast and 10 per cent to the East Coast last week, representing an increase of around US$1,000/FEU, or 50 per cent, since the start of the conflict. However, rates remain below levels seen during previous shipping crises.

Asia-Europe freight rates have returned close to pre-war levels. Northern Europe rates are currently around US$100/FEU above late-February levels, while Asia-Mediterranean rates rose 7 per cent last week before declining again this week.

The report also noted signs of slowing manufacturing activity in parts of the Far East due to higher input costs and supply constraints linked to the conflict. Changes in U.S. consumer spending patterns could also affect peak-season container demand in the coming months.

Air cargo markets continue to reflect elevated fuel costs and shifting flight capacity. The Freightos Air Index global benchmark remains 25 per cent above pre-war levels, although it declined 5 per cent month-on-month.

China-U.S. air cargo rates at US$5.48/kg are 7 per cent below late-February levels. South East Asia-Europe rates returned to around US$5.40/kg, while South Asia-Europe rates eased 10 per cent from recent highs to US$4.60/kg. South East Asia-North America rates declined 9 per cent from peak levels to US$6.41/kg.

Cargo lanes into the Middle East remain under stronger pressure. North America-Middle East rates increased 6 per cent week-on-week to US$4.57/kg, while Europe-Middle East rates reached US$3.87/kg, remaining close to recent peak levels.

Source: Container News