Weekly highlights

Ocean rates – Freightos Baltic Index

Asia-US West Coast prices (FBX01 Weekly) increased 4%.   

Asia-US East Coast prices (FBX03 Weekly) increased 1%.

Asia-N. Europe prices (FBX11 Weekly) increased 10%.

Asia-Mediterranean prices(FBX13 Weekly) decreased 5%.

Air rates – Freightos Air Index

China – N. America weekly prices stayed level.

China – N. Europe weekly prices decreased 3%.

N. Europe – N. America weekly prices decreased 3%.

Analysis

The US paused its Operation Freedom, designed to support vessel transits out of the Strait of Hormuz  – and which sparked renewed US-Iran exchanges of fire as well as Iranian missile attacks on Gulf states last week – less than two days after its launch. 

Even amid sporadic military engagement, US-Iran negotiations continue, though the sides remain far apart, with President Trump stating that he may restart the operation if negotiations stall. In the meantime, Iran announced the creation of a Persian Gulf Strait Authority through which vessels are required to request permission – and possibly pay – to pass through the strait. 

Maersk CEO Vincent Clerc estimates that elevated fuel prices due to the closure has the carrier facing $500M per month in additional costs. He also reports that Maersk has so far been able to pass those costs on to customers via higher freight rates. 

Freightos Baltic Index container price behavior has varied by lane, however, with transpacific rates up about $1,000/FEU compared to before the war, while Asia – Europe prices that climbed by a few hundred dollars per FEU in March have mostly slipped back to pre-war levels. Asia – N. Europe rates climbed by 10% last week to $2,850/FEU, but prices so far this week are trending down, similar to rate behavior to the Mediterranean earlier this month.

Carriers are planning additional, likely modest, increases for mid-month. In preparation, they are stepping up blanked sailings – with reports of east-west service space getting tight and some containers being rolled –  to support higher spot rates during what is still a low demand stretch, and hoping peak season demand picks up to support prices later in the year. 

The latest National Retail Federation US ocean import volume report projects June arrivals to be 2% lower than May, with volumes increasing 4% month on month in July before easing slightly in August and further in September. If these estimates materialize, transpacific peak season will be a muted one relative to recent years, with the July peak 8% lower than last year’s tariff driven burst, but also 6% lower than the August peak in 2024.  

The NRF suggests that this relative weakness reflects importer caution due to current economic uncertainty. Maersk’s Clerc also suggests that a coming downturn in ocean demand due to higher consumer prices is possible and could make this year’s H2 challenging and possibly loss-making for carriers still facing elevated fuel costs. 

Elevated jet fuel prices are contributing to global air cargo rates that are 30% higher than before the war and year on year. Higher costs are pushing some volumes away from the skies when feasible, including some Asia – Europe shippers opting for ocean-air services via West Coast US ports. 

Overall though, the market is stabilizing as air space closures decrease and capacity from Gulf carriers continues to recover. Jet fuel prices have also leveled out after coming down from April highs as the market has shifted sourcing for jet fuel – and energy exports more generally – to the extent possible to account for the Persian Gulf export drop, and as demand for fuel has also eased as carriers scrap unprofitable flights.

Freightos Air Index rates decreased slightly or were level on most major lanes last week. Prices out of China were stable at $5.47/kg to N. America and dipped 3% to $5.16/kg to Europe. While China – US rates are now back to pre-war levels, prices to Europe remain 50% higher, but down 15% from their peak in April. S. Asia – Europe rates were stable at $4.66/kg last week – a level 80% higher than in February – but down 10% from a month ago. SEA – Europe prices meanwhile were up double digits last week to a new high of $5.74/kg.

In trade war news, President Trump and China’s Xi Jinping are set to meet in Beijing later this week for a summit aimed at stabilizing the US-China trade relationship – whose status quo will expire in November – but complicated by the Iran war.  

US tariffs on China are lower at the moment than before the US Supreme Court invalidated Trump’s IEEPA-based tariffs in February. The White House replaced IEEPA duties with a 10% global tariff based on Section 122 that is set to expire in late July, with the administration working to replace the 122 duty with Section 301-based IEEPA-like tariffs by then. 

Last week though, the US Court of International Trade ruled that the president’s use of Section 122 was invalid. The ruling and the court-required refunds were limited to the specific plaintiffs in the case, but open the door for other businesses to sue as well. The White House has appealed the ruling and asked that the tariffs stay in place during the appeals process or until they expire, but these developments do set the stage for another possible widespread tariff refund.