The recent seizure of an Israeli-owned, MSC-operated container vessel near the Strait of Hormuz the day before Iran's missile and drone attack on Israel, alongside the ongoing, Iran-sponsored attacks on Red Sea traffic, poses yet another potential challenge to the container industry, according to a new analysis by Freightos.
The booking and payments platform for international freight said that if attacks like this one continue, broaden, or Iran moves to completely close the strait, Middle East container flows would feel the strongest impact.
"A closure would see Kuwait, Iraq and most of the UAE's ports become inaccessible. Saudi Arabia, with access to their Red Sea port access already challenged, would see their Gulf port access cut off as well," Freightos said.
It added that these disruptions would also impact container hubs in India, some of which are part of services that connect S. Asia and the Middle East.
Meanwhile, on North America's East Coast, alternative ports continue to handle the rerouting away from the Port of Baltimore without reports of significant congestion or increases in freight rates.
Freightos said now, several weeks after the bridge collapse, it is unlikely that congestion or disruptions will materialize.
Ex-Asia ocean rates to N. America was level last week, and prices to Europe and the Mediterranean ticked up slightly, suggesting that container rates have reached their slow season, Red Sea diversion-adjusted floor of US$3,000 - US$4,500/FEU.
"If diversions continue into the Q3 peak season months, we can expect rates to increase relative to this floor," commented Judah Levine, head of research at Freightos.
"And though volumes are likely to rebound to Europe, expectations, overall, are subdued. Demand projections for N. American imports are more optimistic," he added.
The latest National Retail Federation ocean import report for N. America projects volumes to be strong relative to last year and to 2019 as we move into Q2. Total H1 volumes are about 11% higher than in both 2019 and 2023, and peak months of July and August are about 5% above 2019 levels as well.
Levine noted that for most of the second half of last year, after coming down from pandemic-driven highs, transatlantic ocean rates leveled off at a loss-making US$1,200/FEU.
Early this year, though, Red Sea diversions had knock-on effects on this lane, too, with rates climbing to nearly US$1,900/FEU in February.
The analysis said rates have eased somewhat since then, but the latest volume reports suggest that a 10% year-on-year Q1 rebound in transatlantic demand also contributed to those stronger rates.
With prices at US$1,728/FEU last week and reports of stronger utilization levels, prices on this lane may no longer be under downward pressure, Levine said.
He added that in air cargo, B2C e-commerce demand out of China continues to be the biggest driver of strong volumes, tighter capacity and upward pressure on rates to N. America, even during these typically slow months for air cargo.
The analysis noted that Freightos Air Index prices from China to N. America at more than US$6/kg last week – compared to the pre-pandemic norm closer to US$2/kg for non-peak months.
"Stakeholders are worried about spiking rates and trouble securing space during the Q4 peak season months when demand for both e-commerce and more traditional air cargo goods will increase," Levine said.
