The Israel-Iran conflict that recently broke out has so far not had a significant impact on freight markets, according to a new analysis by Freightos.
The digital booking and payment platform for international freight noted that one major concern is that Iran could close the Strait of Hormuz – through which normal movement continues for now – disrupting the estimated 20% of global oil supply that flows on tankers through the waterway, increasing oil prices and creating international pressure on Israel.
"Iran may hesitate to do so, though, both because their oil exports are dependent on the Strait and because there may be sufficient supply at the moment to blunt any impact on fuel prices," Judah Levine, head of research at Freightos, said.
The analysis noted that only 2% - 3% of global container volumes transit the Strait of Hormuz, so disruptions to the container market would be felt primarily in the Middle East.
"But closure of the strait would cut off access to Dubai's Port of Jebel Ali, a major transhipment hub between the Far East and points to the west," Levine said, adding that tranship volumes would need to be shifted elsewhere, possibly to South Asian hubs, which could cause congestion and higher freight rates.
Israeli container carrier ZIM Lines has reported that its operations at Israel's Haifa and Ashdod ports are normal despite Iranian missile and drone attacks.
Trade deals update with the US
"Linking the Israel-Iran war and the US trade war, President [Donald] Trump left the G7 meeting in Canada a day early to focus on developments in the Middle East," Levine said, noting that other than progress finalizing a US agreement with the UK, Trump leaves the summit without trade deals with G7 members even as the July expiration of the reciprocal tariff pause for these countries nears.
The US is reportedly close to a trade deal with Pakistan, but Trump said the US may choose to unilaterally set tariff rates for many other countries if agreements are not in place in time.
Other officials suggested the White House could extend pauses for countries with negotiations underway and progressing in good faith.
Levine pointed out that a federal court also ruled that Trump tariffs voided by a US trade court in late May can remain in effect through the appeals process, and the court intends to hear arguments on July 31, which means the tariffs likely will remain valid at least through the August 12 expiration date set for the lowered US levies on China – and possibly beyond, as an appeal to the Supreme Court is also expected.
Meanwhile, the biggest trade development, according to the analysis, came via statements from President Trump that the US and China have tentatively agreed to terms for a new trade deal, though the administration indicated that the agreement would keep the current 30% minimum tariff on Chinese goods and China's 10% tariff on the US in place.
US shippers have been frontloading peak season goods since the May 12 China-US de-escalation in anticipation that tariffs could climb again in August.
"Until a deal is actually signed, the early peak season rush is likely to continue, with the most recent NRF container volume forecast suggesting that the strongest post-May 12th period of demand may already be coming to a close," Levine said.
If a China-US deal does materialize soon – and shippers are convinced it will stick – we could see some reduction in urgency and further easing in demand as, stuck with 30% tariffs, shippers spread out volumes across the more typical peak season months into October.
"But that arrivals in this year's peak season, peak month of July, are expected to be lower than in April suggests that some of the frontloading to date will come at the expense of volume strength for the rest of the year, deal or no deal," Levine added.
"As such, there are indications that transpacific container spot rates may have already peaked too, meaning market conditions will not be there to support carriers' announced June 15 and July 1 GRIs," he further said.
In air cargo, Freightos noted that China-US rates were level last week at US$5.29/kg. This price is down slightly from the bump to about US$5.40/kg seen in late May and early June, which was likely due to a quick increase in demand and some frontloading when the US reduced tariff levels for China.
"Carriers continue to shift capacity to other lanes as China-US e-commerce volumes have dropped, though despite reports that services are being added to trades like Asia-Europe, so far rate levels remain stable," Levine, said.