[Freightos Weekly Update] Ocean rates steady as shippers brace for July hikes

Key insights:

1. US-Iran negotiations toward a final peace deal continue, sometimes under fire, as Iran escalates steps aimed at establishing itself as the sole authority over the Strait of Hormuz, leading to more stops and starts for oil flows.

2. In the meantime, the main driver for ocean container rates is surging peak season demand, not oil prices. Transpacific prices to the West Coast have more than doubled since mid-May, but Asia - Europe rates are up 70% - 85% as well, indicating frontloading ahead of July BAF and manufacturer price increases are significant drivers of the early rush – alongside some pull forward ahead of tariffs for US shippers specifically.

3. Carriers will attempt start of July GRIs and PSSs. The degree to which these introductions succeed in pushing prices up further in the coming weeks should indicate whether the early rush will be sustained a while longer or translate into an early peak season unwind as well.

4. In air cargo, Gulf carriers continue their gradual recovery, while others still avoid the region. These capacity shifts and reductions – as well as fuel costs still elevated 20% above pre-war levels – continue to keep the Freightos Air Index global benchmark rate 40% above pre-war and year ago levels.

Ocean rates - Freightos Baltic Index:

• Asia-US West Coast prices (FBX01 Weekly) increased 8% to $6,175/FEU.

• Asia-US East Coast prices (FBX03 Weekly) increased 8% to $7,998/FEU.

• Asia-N. Europe prices (FBX11 Weekly) increased 3% to $4,883/FEU.

• Asia-Mediterranean prices (FBX13 Weekly) increased 2% to $6,423/FEU.

Air rates - Freightos Air index:

• China - N. America weekly prices decreased 9% to $6.59/kg.

• China - N. Europe weekly prices decreased 2% to $4.55/kg.

• N. Europe - N. America weekly prices stayed level at $2.01/kg.

Analysis

US-Iran negotiations toward a final peace deal continue, sometimes under fire, as Iran escalates steps aimed at establishing itself as the sole authority over the Strait of Hormuz moving forward.

Oil volumes out of the Gulf states are rebounding, though marine traffic was paused over the weekend following Iranian strikes on transiting vessels and sites in Bahrain and Kuwait. Iran has advised all vessels to pass through the northern Strait of Hormuz passage along the Iranian coast only, and only via coordination with Iranian authorities. The IMO meanwhile had announced and started to implement vessel evacuations via the southern passage along the Omani coast, but has now paused this effort following the Iranian attack on a container vessel that was not transiting through the Iranian lane.

In the meantime, the main driver for ocean container rates right now is surging peak season demand, not oil prices.

Though spot prices ticked up only moderately last week across the major trades, the early start to this year’s peak has sent rates spiking on the main east-west lanes since mid-May, with carriers shifting capacity from secondary lanes to service this demand, contributing to rate increases on secondary trades too.

Transpacific prices increased 8% to both lanes last week with rates at about $6,200/FEU to the West Coast – a 120% climb since mid-May – and $8,000/FEU to the East Coast for an 85% increase over the last six weeks. Asia - Europe prices climbed just 2-3% last week but at $4,900/FEU, rates to N. Europe are up 70% since mid-May and Mediterranean prices of $6,500/FEU are up 85% in this span.

Transpacific East Coast rates are now $1k/FEU higher than last year’s frontloading-driven summer high, with West Coast prices just above their 2025 peak. Rates to Europe and the Mediterranean are now $1,300/FEU and $3,000/FEU above their 2025 peak season highs respectively. Worsening port congestion partly caused by surging volumes at some of the major hubs in South Asia, the Far East and Europe is causing delays, which is reducing available capacity and now contributing to the upward pressure on rates.

Multiple factors may be spurring the early peak season rush, including frontloading ahead of July BAF hikes, manufacturer price increases, and – for US shippers – the approaching tariff deadline. If enough shippers are indeed pulling peak season volumes forward, we could expect the early start to mean an early peak season unwind as well, possibly some time in July.

But delays at congested ports could mean that this volume strength will stretch on a little longer than many shippers may have preferred. Carriers are set to introduce more rate increases to start July, so the degree of success carriers have with these price hikes should reflect where the market is in terms of this year’s peak season peak.

In air cargo, Gulf carrier capacity and volumes continue their gradual recovery path started soon after the start of the war, though other global carriers continue to avoid the Middle East. These capacity shifts and reductions – as well as fuel costs still elevated about 20% higher than before the war – continue to keep the Freightos Air Index global benchmark rate 40% above pre-war and year ago levels.

Even so, rates have come down and mostly evened off from earlier war time highs on most lanes. China - Europe prices dipped 2% last week to $4.55/kg – about the level this lane has held since early June, and down from an early May peak of $5.25/kg. China - US prices eased 9% last week to $6.60/kg, possibly reflecting some dip in volumes as the Prime Day rush ended.