A new round of sharp rise in freight rates is coming, and cargo owners are forced to rush into the spot market
Sunny Worldwide LogisticsIt is a logistics company with more than 20 years of transportation experience, focusing on markets such as Europe, the United States, Canada, Australia, and Southeast Asia. It is more of a cargo owner than a cargo owner~
Although global container shipping demand has not yet seen substantial growth, spot freight rates on major routes continue to rise. The latest statistics from Xeneta, a shipping analysis agency, show that as of early June 2026, the spot freight rate on the route from the Far East to the West Coast of the United States has increased by more than 80% compared with before the outbreak of the current Middle East crisis. During the same period, freight rates from the Far East to the East Coast of the United States, Northern Europe and the Mediterranean increased by 70%, 44% and 40% respectively.
Market analysis: This round of rise is not driven by demand
Xeneta chief analyst Peter Sand said in an interview with the media that the current freight rate increase is not driven by peak season demand in the traditional sense. “It is still not possible to conclude that the peak season has arrived early, and the existing cargo volume growth is not enough to support this conclusion.” The second quarter is usually a relatively off-season for the container shipping market. However, in recent years, geopolitical conflicts and supply chain disruptions have frequently disrupted the rhythm of market operations, and traditional seasonal patterns have gradually failed.
Although there is no significant increase in demand on the demand side, spot freight rates still maintain an upward trend. The Shanghai Export Containerized Freight Index (SCFI) has risen for five consecutive weeks, climbing to its highest level since September 2024. The World Container Freight Index (WCI) released by Drewry also showed a continuous upward trend. The latest index rose 3.2% to US,799.55, recording positive growth for four consecutive weeks.
External variables dominate the market, and supply and demand fundamentals have limited explanatory power.
Sander pointed out that the main driving factors for current market fluctuations are various external uncertainties, rather than supply and demand fundamentals. This makes it significantly more difficult for market participants to judge trends. “What drives market changes is not actual supply and demand, but crisis and uncertainty.”
Taking the transatlantic route as an example, freight rates on this route also increased this spring, but Xeneta's analysis shows that it is difficult to find sufficient supporting reasons from both the demand side and the capacity side. The cargo volume of this route in the first quarter of this year was basically the same as that of the same period last year, and the scale of capacity reductions by liner companies was also extremely limited—only about one 4,000TEU-class ship was reduced per week. "This obviously cannot explain the increase in freight rates from a fundamental perspective," Sander said.
The contraction of effective transport capacity and the superposition of surcharges have pushed up freight rates.
Although there was no surge in cargo volume, effective capacity did decrease. The Red Sea crisis forced a large number of ships to circumnavigate the Cape of Good Hope, significantly lengthening the voyage and occupying a considerable amount of shipping capacity for a long time. At the same time, many liner companies continue to test the market's acceptance of higher freight rates by imposing peak season surcharges (PSS). Sander believes that it is the high degree of market uncertainty that prompts cargo owners to be willing to pay higher freight rates to ensure the stability of the supply chain.
Negotiations on long-term agreements are delayed, and cargo owners turn to the spot market
Xeneta also pointed out that another key factor in the increase in freight rates on the Pacific route is the delay in annual long-term contract negotiations due to the situation in the Middle East. By convention, long-term agreements on trans-Pacific routes are usually negotiated between March and April each year, and new contracts are implemented from May 1. However, this year, the situation in the Middle East suddenly escalated and the prospects were unclear. A large number of cargo owners postponed the signing process.
As a result, many cargo owners who originally relied on long-term contract space were forced to enter the spot market to purchase shipping capacity. "Because no new contracts covering transportation needs have been signed yet, many cargo owners are overly dependent on the spot market." Sander analyzed that this situation is obviously more beneficial to liner companies. Cargo owners must ultimately realize that they cannot be exposed to highly volatile spot market risks for long periods of time. They may need to accept relatively higher long-term contract prices, but at least they won't be as extreme as the current spot market.
Shippers face major changes to transportation budgets
The current freight price trend has completely disrupted many cargo owners’ budget plans for 2026. Sander pointed out that as early as the autumn of 2025, the market generally expected spot freight rates to fall by about 25% in 2026, and long-term contract freight rates were expected to drop by about 10%. Now this expectation has been completely disappointed. "There is no way the spot market is going to fall another 25%. Businesses that budgeted for this are now facing multi-million dollar budget shortfalls."
Xeneta observed that some companies have exhausted their entire transportation budget in the first five months. "These companies find that much of their annual logistics budget has been used in advance. To meet transportation needs in the second half of the year, they have to continue to apply for additional budgets and explain current market conditions to management."
