Shipping and air freight markets remain under pressure after ceasefire

Despite the US-Iran ceasefire, shipping through the Strait of Hormuz remains highly constrained. For the shipping industry, bunker availability is a growing concern. If the conflict persists, carriers may have to slow steam or cancel sailings to reduce fuel consumption, potentially putting further upward pressure on rates. The Drewry World Container Index (WCI) edged up by 1% per 40ft container on average. However, rate developments varied significantly by trade lane: Rotterdam - New York jumped by 25%, while Shanghai - Rotterdam declined by 9%. Sharp movements in Transatlantic rates are uncommon. According to shipping consultancy Drewry, the main driver is a 13% reduction in capacity on this route in April compared to the previous month. As carriers continue to push for higher rates, Drewry expects spot rates to rise further in the coming weeks. Following the ceasefire, the focus is on clearing vessels already stuck in the Persian Gulf rather than sending in new ones, Drewry stated. Disruptions to oil flows persist and could take months to fully normalise. This continues to constrain bunker fuel availability, which is likely to keep freight rates elevated in the near term, according to Drewry.Off-peak seasonFreightos noted that ocean rates would typically be flat or easing at this time of year, between Lunar New Year and the peak season. However, despite weak demand, Transpacific rates to the US West Coast have risen by nearly 40% since just before the conflict, while rates from Asia to Northern Europe have also increased by 20%. It added that downward pressure on rates from current supply-demand dynamics may be limiting the extent to which fuel surcharges, various fees, and GRIs are able to push rates higher.Freightos noted that, in addition to fuel costs, bunker availability is also becoming a concern. Only about a month’s worth of fuel stocks remain in Singapore—the world’s largest bunkering hub—while Rotterdam, the second largest, remains well supplied. If the conflict persists, carriers may resort to slow steaming or blank sailings to reduce fuel consumption, potentially adding further upward pressure on rates. The situation in the Middle East is also affecting air cargo flows. Freightos Air Index data shows that rates from South Asia to Europe are 62% higher than before the war, at $4.17/kg. Prices from Southeast Asia to Europe have risen by 33% to $4.50/kg, while rates from Europe to the Middle East have doubled to $3.67/kg. Rates have stabilized or eased slightly on most lanes in recent weeks.Pre-conflict levelsThe US-Iran ceasefire is expected to provide some short-term relief to the air freight market. However, according to the freight rate data platform Xeneta, it will still take one to two months for capacity and rates on routes via Middle Eastern hubs to return to pre-conflict levels.Niall van de Wouw, Xeneta Chief Airfreight Officer, said in an update: “Bringing air capacity back to these corridors should provide welcome relief for shippers, many of whom are facing continuing severe disruption in ocean supply chains that will take far longer to recover from the conflict.In the week ending 5 April, data from Xeneta shows that air cargo spot rates surged by 105% on the South Asia–Europe corridor. Rates also increased significantly on other routes, rising 87% from Europe to the Middle East, 84% from South Asia to the Middle East, 82% from South Asia to North America, and 72% from Southeast Asia to Europe.Fragile two-week ceasefireVan de Wouw does not expect spot rates to fall as quickly as they rose. Shippers are also unlikely to make major routing decisions based on a fragile two-week ceasefire, particularly given Iran’s re-closure of the Hormuz Strait just hours after the agreement was announced. “Gulf carriers such as Emirates and Qatar Airways operate some of the world's most important air freight networks, but those networks depend on passenger revenue.”