Global freight markets are seeing an upward pressure on rates, even as underlying demand remains soft. According to Freightos’ Weekly Freight Update released on April 7, ocean freight rates would typically hold steady or ease during the seasonal lull between the Lunar New Year and the traditional peak season. However, this year, pricing momentum has turned unexpectedly firm.
As reported by Supply Chain Dive, Freightos Baltic Index rates from Asia to the U.S. West Coast and the East Coast both rose week-over-week, by 11% and 5%, respectively. The increase is brought on by fuel-related cost increases because of higher oil prices.
The rate pressure is evident across major indices such as the Shanghai Container Freight Index (SCFI), which has climbed more than 40% since the onset of the Iran conflict, and Drewry’s World Container Index, which has risen for six consecutive weeks, as reported by ShippingWatch.
Despite muted cargo volumes, carriers are still considering general rate increases and implementing fuel and emergency surcharges to offset rising operating costs, reported Supply Chain Dive and American Shipper. Hapag-Lloyd estimated additional weekly operations costs of up to USD 50 million, driven by higher bunker prices, increased insurance premiums, and rising container storage fees.
Freightos data cited by Supply Chain Dive indicated Asia–U.S. West Coast shipping rates are up 8% year-over-year, despite weak demand, ongoing fleet growth, and surplus capacity.
The pressure is even more pronounced in air cargo markets. American Shipper reported that airspace closures, reduced capacity at Middle East hubs, and longer routings have tightened supply and sharply increased jet fuel costs.
Xeneta data indicated that air cargo capacity in the Middle East was already operating 30% below pre-conflict levels. Carriers have also responded through aggressive fuel surcharges and passing higher costs directly to shippers. American Shipper cited Flexport data showing that jet fuel costs have surged nearly 80% since the start of the crisis.
Source: Freightos, Supply Chain Dive, ShippingWatch, American Shipper