Cosco ships abort Hormuz transit amid $2m passage demands
Two of Cosco Shipping Lines’ megamax container ships were apparently stopped from crossing the Strait ...
HLAG: DIRECTION FOR SPOT RATESHLAG: RED SEA SITUATIONHLAG: SURCHARGES LAGHLAG: BULLET QUESTION HLAG: BUNKER COSTSHLAG: WAR TIME AND BUNKER HLAG: GAUGING WAR COSTSHLAG: INSIGHT ON CONTRACTSHLAG: FIRST QUARTER TRENDSHLAG: EARNINGS GUIDANCE HLAG: YIELD DOWNHLAG: VOLUME GROWTH HLAG: ZIM UPSIDEHLAG: ZIM DEAL UPDATE HLAG: COST SAVINGS ON THE RADARHLAG: GEMINI SCHEDULE RELIABILITYHLAG: TERMINALS GROWTHHLAG: BEATING CONSENSUS ESTIMATESHLAG: SOLID DOES IT
HLAG: DIRECTION FOR SPOT RATESHLAG: RED SEA SITUATIONHLAG: SURCHARGES LAGHLAG: BULLET QUESTION HLAG: BUNKER COSTSHLAG: WAR TIME AND BUNKER HLAG: GAUGING WAR COSTSHLAG: INSIGHT ON CONTRACTSHLAG: FIRST QUARTER TRENDSHLAG: EARNINGS GUIDANCE HLAG: YIELD DOWNHLAG: VOLUME GROWTH HLAG: ZIM UPSIDEHLAG: ZIM DEAL UPDATE HLAG: COST SAVINGS ON THE RADARHLAG: GEMINI SCHEDULE RELIABILITYHLAG: TERMINALS GROWTHHLAG: BEATING CONSENSUS ESTIMATESHLAG: SOLID DOES IT
The fallout from the US-Israel-Iran conflict is now beginning to bleed into the main container shipping trades as carriers begin to mitigate against soaring fuel prices.
The most affected trade was paradoxically the least affected by the conflict itself – the eastbound transpacific routes.
Today’s Shanghai Containerised Freight Index (SCFI) showed a 14.5% week-on-week jump in its Shanghai-US west coast base port leg to finish at $2,352 per 40ft, while its Shanghai-US east coast base port route was up 12% on the previous week to $3,624 per 40ft.
US west coast freight forwarder Freight Right said that transpacific freight rates climbed $400-$600 per 40ft over the past week after a series of rate increases with a rates of $2,000-$2,100 per 40ft on shipments to the west coast and said further increases were likely next month.
“Factoring in standard margins, the total cost for importers is approaching the $2,500-$2,600 range as we move into April,” it said and added that rates to the east coast had breached the $3,000 per 40ft mark this week as carriers reduced capacity.
“Rising oil prices are the primary driver behind recent rate hikes. Carriers are utilising these costs as the justification for General Rate Increases (GRIs) and new surcharges,” the forwarder said.
However, it added that North American demand remains weak, while analysts at Linerlytica claimed the rate rally would not last.
“Although SCFI transpacific rates will see another jump this week, they are not expected to stick with carriers still unable to fill up all available capacity especially on the East Coast where utilization levels have been particularly poor.
“Annual transpacific contract negotiations that have been postponed after the outbreak of the Iran war have been restarted, with initial feedback suggesting rates are mostly maintained at last year’s levels but with higher floating bunker surcharges,” it added.
This week’s World Container Index (WCI) from Drewry saw a more moderate 4% week-on-week gain on its Shanghai-Los Angeles route $2,686 per 40ft, while its Shanghai-New York leg was up 3% week-on-week to end at $3,393 per 40ft.
Meanwhile, spot rates on the Asia-Europe trades also rose this week and are now approaching levels last seen during the pre-Chinese New Year peak in mid-January.
The WCI’s Shanghai-Rotterdam leg rose 4% on the previous week to end at $2,552 per 40ft, which Drewry attributed to “ongoing tensions in the Middle East”, but carriers’ hopes that the conflict would lead to a jump in spot rates has been largely unrealised.
However, It may also be that carriers are realigning with the market in their efforts to raise rates – yesterday CMA CGM announced a new Asia-North Europe FAK [Freight All Kinds] rate of $3,500 per 40ft for implementation on 1 April, a level which is $500 less than the $4,000 per 40ft it was targeting just last week.
Today’s SCFI, which often behaves as a forward-curve for the following week’s WCI, saw a 4% increase on its Shanghai-North Europe base port route, while its Shanghai-Mediterranean route was unchanged from the week before.
However, there was a 10% week-on-week jump in the WCI’s Shanghai-Genoa leg, which finished the week at $3,474 per 40ft.
This may partly be explained by demand for east Mediterranean transhipment hubs which are expected to play a key role in supplying cargo to the Persian Gulf markets, which are now largely set to be supplied through the Saudi Red Sea port of Jeddah and accessed from the Suez Canal.
“Med rates continue to hold up better than North Europe with demand for alternative Middle East Gulf via Med hubs still holding, although the impact has been mitigated by direct Red Sea services with additional loaders still being added although most of the ships added are smaller ships of below 3,000 teu,” Linerlytica said.
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Facts Only
Two Cosco Shipping Lines megamax container ships were stopped from crossing the Strait of Hormuz.
Passage demands of $2 million were reportedly made for transit through the Strait.
The Shanghai Containerised Freight Index (SCFI) showed a 14.5% week-on-week increase for the Shanghai-US west coast route, reaching $2,352 per 40ft container.
The Shanghai-US east coast route rose 12% to $3,624 per 40ft container.
Freight forwarder Freight Right reported transpacific freight rates climbing $400-$600 per 40ft over the past week.
Rates to the US west coast are now $2,000-$2,100 per 40ft, with further increases expected in April.
Rates to the US east coast have breached the $3,000 per 40ft mark.
The World Container Index (WCI) showed a 4% week-on-week gain for the Shanghai-Los Angeles route, reaching $2,686 per 40ft.
The Shanghai-New York route rose 3% to $3,393 per 40ft.
The WCI’s Shanghai-Rotterdam route increased 4% to $2,552 per 40ft.
The Shanghai-Genoa route saw a 10% week-on-week jump to $3,474 per 40ft.
CMA CGM announced a new Asia-North Europe FAK rate of $3,500 per 40ft, effective April 1, down from a previous target of $4,000.
Annual transpacific contract negotiations have resumed, with rates largely maintained at last year’s levels but with higher floating bunker surcharges.
Executive Summary
The global container shipping market is experiencing significant disruptions due to geopolitical tensions and rising fuel costs. Two Cosco Shipping Lines megamax container ships were reportedly stopped from transiting the Strait of Hormuz amid demands for $2 million passage fees. Meanwhile, transpacific freight rates have surged, with the Shanghai Containerised Freight Index (SCFI) showing a 14.5% week-on-week increase for the Shanghai-US west coast route, reaching $2,352 per 40ft container. Rates to the US east coast also rose by 12% to $3,624 per 40ft. Freight forwarders attribute these hikes to rising oil prices, which carriers are using to justify general rate increases and new surcharges. However, analysts suggest the rally may be short-lived due to weak North American demand and underutilized capacity, particularly on east coast routes.
Asia-Europe trade routes have also seen rate increases, with the WCI’s Shanghai-Rotterdam leg rising 4% to $2,552 per 40ft, though carriers have adjusted their rate targets downward. The Mediterranean route remains stronger, partly due to demand for east Mediterranean transshipment hubs serving Persian Gulf markets. Despite these fluctuations, annual transpacific contract negotiations have resumed, with initial feedback indicating rates are being maintained at last year’s levels but with higher floating bunker surcharges. The situation reflects broader uncertainties in global trade, driven by Middle East tensions and volatile fuel costs.
Full Take
The strongest version of this narrative highlights the immediate economic impact of geopolitical tensions on global shipping, with rising fuel costs and transit disruptions driving up freight rates. The article credibly presents data from indices like the SCFI and WCI, along with industry analyst perspectives, to illustrate how carriers are responding to volatility. However, the narrative also reveals tensions between short-term rate hikes and longer-term market realities, such as weak demand and excess capacity, which may undermine sustained price increases.
Patterns detected: none. The article avoids emotional exploitation or distortion, focusing on verifiable data and industry commentary. It does not engage in bad faith tactics or false framing, though it could be argued that the emphasis on rate hikes without deeper exploration of underlying demand dynamics might subtly amplify a narrative of crisis.
Root cause: The paradigm here is one of geopolitical risk translating into economic cost, with carriers leveraging instability to justify rate increases. The unstated assumption is that these disruptions are temporary, but the historical pattern echoes past crises where shipping markets adjusted to new norms rather than reverting to pre-conflict conditions.
Implications: Human agency is constrained by structural forces—importers face higher costs, while carriers and forwarders navigate uncertainty. The second-order consequences could include supply chain realignments, with Mediterranean hubs gaining prominence as alternatives to Red Sea routes. Who benefits? Carriers with pricing power and hubs like Jeddah. Who bears costs? Importers and consumers facing higher prices.
Bridge questions: How might prolonged geopolitical instability reshape global trade routes beyond short-term rate adjustments? What evidence would indicate whether current rate hikes are sustainable or merely speculative? Are there alternative perspectives on how carriers and shippers could collaborate to mitigate costs rather than passing them downstream?
Counterstrike scan: If this were part of a coordinated influence campaign, the playbook might involve amplifying fears of supply chain disruptions to justify rate hikes or policy interventions. However, the article’s reliance on data and industry sources does not align with such a pattern. It presents a factual account without overt manipulation.