The global rush to grab space has reappeared, and freight rates are likely to soar all the way into the third quarter

Since May, the global container shipping market has once again entered a tight supply and demand channel. Cargo volume on North American routes has rebounded significantly, and the tight space situation has rapidly spread to many trunk routes. Many liner companies have raised freight rates one after another. Industry analysts pointed out that due to the combination of multiple factors such as the imminent expiration of temporary tariff measures in the United States, increasing congestion at major ports around the world, and the continued fermentation of geopolitics in the Middle East, a new round of freight rate increase cycle has begun, and the increase may continue until the end of the third quarter of this year.

At the Wanhai Shipping shareholders’ meeting held on May 28, the company’s general manager Xie Fulong said that the current shipping market has re-presented a phenomenon of “squatting for space” similar to that during the epidemic. He pointed out that the 10% temporary tariff imposed by the United States on imported goods will expire on July 24, 2026, and the market generally has uncertain expectations for the direction of subsequent policies. In order to avoid the risk of potential increases in tax burdens, a large number of cargo owners have chosen to ship goods in advance, striving to have their goods arrive in the United States before the policy expires.

Xie Fulong revealed that this round of rush shipments not only occurred in mainland China and Taiwan, but also in many export markets in Southeast Asia. There was also a concentrated wave of early shipments. Space on North American routes continues to be tight, and some flights are nearly full. Before the tariff policy is clear, manufacturers are generally unwilling to bear the uncertainty of subsequent costs. As long as they have the conditions for early shipment, they will try their best to complete transportation within the window period. Industry analysts believe that this is one of the core driving forces behind the recent rapid rise in U.S. line freight rates.

With the concentrated release of demand, liner companies have recently raised basic freight rates and various surcharges several times. Market feedback shows that the space on some North American routes has become saturated. Even if cargo owners are willing to accept higher freight rates, they still face difficulties in booking space or delays in shipment of goods. Xie Fulong judged that the intensity of this round of freight rate increases "will be very fierce", and there is still room for further expansion in subsequent increases. From the perspective of the overall supply and demand pattern of the market, global container transportation has gradually shifted from the previous loose capacity to a period of tight supply and demand, especially in North America.

In addition to demand-side factors, port operation bottlenecks are also an important support for rising freight rates. Xie Fulong pointed out that ports in the Middle East, the Red Sea, India and other regions are currently experiencing relatively obvious congestion, and the waiting time of ships at anchorages has been significantly lengthened. Some of the effects have begun to be transmitted to other hub ports in Europe and Asia. As Indian ports undertake the transshipment and supply needs of a large number of goods diverted from the Middle East, the operating pressure is particularly prominent, and regional logistics efficiency has been significantly affected. Port congestion directly affects ship turnover efficiency, which is equivalent to "locking" a part of the effective supply in the existing shipping capacity, thereby driving up spot freight rates.

Continued geopolitical tensions in the Middle East are also affecting regional supply chains. Xie Fulong mentioned that due to the escalation of the situation between the United States and Iran, the supply of livelihood supplies in some areas of the Middle East has been affected, and local inventories have begun to tighten after months of digestion. Against this background, importers are accelerating replenishment arrangements to the UAE and other Gulf countries, and regional transportation demand has picked up. The combined effect of the rebound in demand in the Middle East market and tight global shipping capacity will further exacerbate the imbalance between supply and demand in the shipping market.

Regarding future freight price trends, Xie Fulong predicts that this round of rising prices will continue at least until the end of the third quarter. As for the fourth quarter, although the traditional peak season may gradually recede, it is still difficult for the overall freight rate to fall significantly due to high fuel prices, rising new shipbuilding costs, high ship rentals, and global port congestion that has not been fundamentally alleviated. The industry generally believes that the global container shipping market has entered a "high-cost, high-volatility" operation stage, and subsequent liner companies may continue to pass on operating costs to the market through surcharge adjustments and increases in basic freight rates.

From a more macro perspective, this round of freight rate increases is not a simple seasonal fluctuation, but the result of the joint action of structural factors on both ends of supply and demand. On the supply side, although the delivery of new ships continues, the increase in nominal capacity is partially offset by the acceleration of scrapping of old ships, the normalization of slow-speed sailing, and the decline in turnover efficiency caused by port congestion. On the demand side, the inventory replenishment cycle in Europe and the United States and the early shipments caused by uncertainty in tariff policies have superimposed on each other, resulting in a concentrated release of short-term cargo volume. Industry insiders predict that even if there is a phased decline after the tariff policy expires, the evolution of the situation in the Middle East and bottlenecks in port infrastructure will provide bottom support for freight rates.