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Container shipping markets remain volatile as geopolitical tensions surrounding the Strait of Hormuz continue to influence freight costs and carrier strategies, despite the US suspending its brief Operation Freedom less than two days after launch. The operation, aimed at safeguarding vessel transits through the strait, triggered renewed US-Iran exchanges alongside Iranian missile attacks on Gulf states.

While negotiations between Washington and Tehran are ongoing, both sides remain far apart, with President Donald Trump warning that military operations could resume if talks fail. Iran has meanwhile established a Persian Gulf Strait Authority requiring vessels to seek approval, and potentially pay fees, for passage through the waterway.

Rising bunker costs linked to the disruption are placing increasing pressure on shipping lines. Maersk estimated the carrier is facing around $500 million per month in additional fuel-related expenses, although higher freight rates have so far allowed the company to pass much of the burden onto customers.

Freight pricing trends remain uneven across major trade lanes. Freightos Baltic Index data showed transpacific container rates holding roughly $1,000/FEU above pre-conflict levels, supported by tighter capacity management. Asia-Europe markets have been less resilient, however, with rate gains recorded earlier in the year largely fading. Asia-North Europe rates rose 10% last week to about $2,850/FEU, though momentum has softened again this week, echoing recent weakness on Mediterranean routes.

Carriers are nevertheless pressing ahead with further mid-month rate increase plans, supported by additional blank sailings and tighter vessel space on east-west services. Reports of rolled containers suggest operators are actively restricting effective capacity during what remains a relatively soft demand period, while hoping a stronger peak season later in the year can sustain spot pricing.

Demand forecasts, however, continue to point to a subdued transpacific peak season. The latest outlook from the National Retail Federation projects US ocean imports in June to decline 2% from May before recovering 4% in July, followed by softer arrivals in August and September.

If realised, July volumes would still trail last year’s tariff-driven surge by 8% and sit 6% below the August 2024 peak. The NRF attributed the weaker outlook to importer caution amid economic uncertainty, while Clerc warned that higher consumer prices and elevated fuel costs could make the second half increasingly challenging, and potentially loss-making, for carriers.

Written by: Farid Muzaffar