Freight rates have risen, and shipping companies have taken action again, collectively imposing surcharges to push up the market.

After declining for three consecutive weeks, container shipping spot freight rates have rebounded in recent days. The latest World Container Index (WCI) released by Drewry showed that the composite index rose 3% month-on-month to US,286 per 40-foot container, ending the previous continuous downward trend.

The driving factor for this round of rise is not a substantial recovery in market demand. From the perspective of freight rate structure, the trans-Pacific route contributed the main increase: the freight rate of the Shanghai to New York route increased by 7% month-on-month to US,721/FEU; the Shanghai to Los Angeles route increased by 5% to US,062/FEU. During the same period, the performance of the Asia-Europe route was relatively stable. The Shanghai to Rotterdam slightly increased by 2% to US,170/FEU, and the flight to Genoa only increased by 1% to US,075/FEU. The increase was significantly lower than that of the trans-Pacific route. The direct reason for the increase in quotations is the new surcharge policy implemented by major liner companies since early May.

Behind this round of freight rate changes is the shipping company’s continued increase in surcharge strategy. Mediterranean Shipping Company (MSC) has increased the emergency fuel surcharge on the Asia-US East route from US0 to US4 per FEU; on the Asia-US West route it has increased from US2 to US7. CMA CGM has introduced a peak season surcharge of USD 2,000 per FEU since May 1. These surcharges directly push up the comprehensive cost of space procurement, thereby driving up the quotation level throughout the week.

Shipping companies tend to use surcharges rather than directly adjust basic freight rates, mainly because surcharges provide greater flexibility. The emergency fuel surcharge can be directly linked to the fuel cost fluctuations caused by the geopolitical situation, and has a relatively transparent transmission logic; the peak season surcharge will not trigger the price adjustment clauses of some index-linked contracts, and it can also quickly optimize current income.

In addition, the increase in emergency fuel surcharges is closely related to the continued deterioration of the situation in the Strait of Hormuz. Although the United States claims to have resumed commercial shipping through military escort, as of May 5, the number of commercial ships passing through the Strait of Hormuz every day has dropped to a level close to zero. Insurance brokerage industry insiders pointed out that war risk insurance rates continue to be high, and the actual transportation costs borne by shipping companies are much higher than in normal times, and these costs are being passed on to freight rates at an accelerated pace.

At the end of April, the Drewry World Container Index fell for the third consecutive week, and the market's comprehensive freight rate closed at ,216/FEU on April 30. Even though fuel costs continue to be high and geopolitical risks continue to increase, freight rates are still under downward pressure due to oversupply and weak demand. From the weakness at that time to the current rebound, the change in just one week is not a directional reversal in fundamentals, but the result of shipping companies actively managing capacity.

Due to the continued delivery of container ship fleet capacity, global shipping capacity is expected to grow by 3.6% to 5% in 2026, while demand growth is only 1.5% to 3%, and the scissor gap between supply and demand remains significant. Against this background, the recent intensive implementation of "blank sailing" by shipping companies has become a key means to absorb excess shipping capacity and maintain spot freight rates. Drewry's capacity data shows that the effective capacity of the Asia-Northern Europe route in May is expected to drop by 3% month-on-month, while the Asia-Mediterranean route will drop by as much as 10%.

After the surcharge strategy on the trans-Pacific route showed initial results, shipping companies are trying to copy similar operations to the Asia-Europe route. CMA CGM, Hapag-Lloyd and Mediterranean Shipping Company have jointly issued an announcement announcing a one-time increase in FAK rates on the Asia-North Europe and Asia-Mediterranean routes starting from May 15. According to the announced adjustment range, the FAK rate for 40-foot containers on the Asia to Northern Europe route will rise to between US,500 and US,500, and the Asia to Mediterranean route will further rise to US,500 to US,600/FEU.

Judging from the gap between the current spot quotation and the target price, the price increase target in mid-May is quite aggressive. The current spot freight rate from Shanghai to Rotterdam is approximately US,170/FEU, while the FAK floor price set by the shipping company has reached US,500/FEU. If this price increase is realized, the spot freight rate of some routes will theoretically increase by more than 60%. However, industry analysts remain cautious about the prospects for this round of price increases. The key constraint is demand itself - Europe's macroeconomic recovery is still weak, import demand continues to be under pressure, and in an environment with limited support for cargo volume, the bargaining space for unilateral price increases is not strong.

Some market views point out that although shipping companies continue to use measures such as withdrawing ships and reducing speeds to reduce the supply of effective transportation capacity, it is difficult to successfully implement the price increase plan when the underlying cargo volume is insufficient and the scissor gap between supply and demand persists, and excess transportation capacity continues to restrict freight rates. In short, the price increase announcement releases the shipping company's pricing signal to the market, and the final price level still needs to be verified by actual transaction data in mid-to-late May or even June.

Compared with the relatively clear switching rhythm between low and peak seasons in previous years, the current fluctuation characteristics of the container shipping market are more prominent, and the predictability of the traditional transportation cycle has declined. On the one hand, shipping companies frequently adjust capacity supply, which slows down the decline in freight rates during off-season; on the other hand, geopolitical risks force a large number of cargo owners to consider multiple variables such as surcharges and space availability when formulating logistics budgets and purchasing decisions. According to some freight forwarders engaged in Asia-Pacific export business, affected by the situation in the Strait of Hormuz, the backlog of goods during the holidays has produced a large number of replenishment orders. Some routes have already seen competition for space. The overall supply of transportation capacity is tight, further supporting the short-term increase in freight rates.

Lars Jensen, CEO of Vespucci Maritime, pointed out in recent market comments that many shipping companies have arranged a considerable number of empty sailings in the first half of May, making the current space "very tight". Freight forwarders also reported that many goods were forced to be postponed until after the holidays. This delayed shipment has occupied a larger part of the currently available quota, further squeezing the space for new bookings. What needs attention now is that the delayed shipments of some shipping schedules and the contraction of shipping capacity have actually formed structural conditions of tight short-term supply and demand. This gives shipping companies a certain degree of operating space to implement a new round of price increases in mid-May, even if the broader demand support on the spot side is not solid.

Looking ahead over the next few weeks and throughout the second quarter, several key variables are worth tracking.

One is the evolution of the geopolitical situation in the Persian Gulf. As a key channel for global energy transportation, the Strait of Hormuz’s traffic efficiency not only directly affects fuel costs and toll rates, but also indirectly shapes the overall plan for cross-regional transportation capacity dispatch. Some oil trading research institutions have characterized the current situation as a "structural market collapse rather than a short-term risk event" and believe that it will be difficult to resume normal navigation in the foreseeable future.

The second is the sustainability of shipping companies’ efforts to withdraw ships. The contraction of shipping capacity can support quotations in the short term, but if demand is delayed and difficult to respond, the recovery of freight rates will still be limited. The current empty sailing plan has been extended to mid-to-late May, and the effective capacity has been significantly reduced month-on-month. However, Drewry also reminded that if the market continues to be fragile and underlying demand fails to improve simultaneously, there will be greater uncertainty in the actual implementation effect of the price increase.

The third is the recovery pace of China-EU trade volume. Currently, the cargo volume forecast for the traditional peak season from June to August has not yet formed a clear direction. If import demand does not see substantial improvement, freight rates in the third quarter may still face downward pressure after a brief seasonal rebound.

Judging from the current signals, shipping companies will continue to conduct more proactive pricing behaviors around surcharges and capacity control before the upcoming peak season. In this process, the simple spot quotation level is no longer enough to fully reflect the true supply and demand situation of the market. The comprehensive cost, space tightness and transportation capacity dispatching ability under the surcharge system will become the key reference for evaluating the market trend. For cargo owners, this means that the traditional “look at the basic quotation” strategy needs to be adjusted accordingly.