Container freight rally loses steam as Iran risk returns

Spot container rates continue to edge higher, although the pace of the increases is slowing. With the seasonal demand peak expected to ease in the coming weeks, freight rates could stabilise. However, renewed tensions involving Iran have once again increased uncertainty over shipping costs and global supply chains.The Drewry World Container Index rose by 2% this week. Shanghai–Rotterdam increased by 5%, while rates in the opposite direction fell by 5%. Both Shanghai–Genoa and Shanghai–Los Angeles rose by 2%, while Rotterdam–New York increased by 5%.Drewry expects container rates to remain broadly stable over the coming week. Bunker fuel prices had started to ease, but renewed tensions involving Iran could quickly reverse that trend if shipping through the Strait of Hormuz is disrupted. Despite the slower weekly increase, demand on the major east-west trade lanes remains exceptionally strong. “The combination of record capacity deployment and further rate increases on the Transpacific tells us demand is strong and that carriers are scrambling to satisfy it, said Peter Sand, Chief Analyst at Xeneta in an update last week. Shippers are moving right now to bring goods out of Asia and get them where they need to be ahead of potential further disruption during the peak season and a backdrop of continuing uncertainty in the Middle East.Xeneta data shows that Transpacific container volumes to the US West Coast have reached record levels, matching the peak seen after last year's 90-day US tariff pause. Although carriers are adding capacity by reinstating services and deploying extra-loader vessels, the market intelligence firm expects spot rates on the main trade lanes to Europe and the US to continue rising until at least mid-July. The additional capacity should improve reliability, but is not yet sufficient to reverse the upward trend in freight rates.