According to Seatrade Maritime, the global container shipping market has experienced a volatile surge in the first half of 2026, driven by geopolitical disruptions in the Middle East that have effectively doubled freight rates on major trade lanes.
Market impact of geopolitical disruption
In a mid-year analysis, Seatrade Maritime Podcast spoke with Daniel Richards, an expert from Maritime Strategies International (MSI), about the dramatic shifts in the container shipping sector. Richards noted that the market began the year in a subdued state, with container lines only “slightly profitable,” similar to the early stages of the Red Sea crisis.
The primary catalyst for the current market volatility was the closure of the Strait of Hormuz due to conflict in Iran. While Richards noted the impact was not as severe as it would be for the tanker market, the closure caused a significant rise in global bunker prices, which in turn created an inflationary impact on freight rates.
The disruption also resulted in a surge in some Middle East freight rates and a loss of capacity as ships became stranded in the Gulf region. Richards highlighted that while bunker surcharges should have only increased costs by hundreds of dollars, actual freight rates have more than doubled in response to the crisis.
On the Asia-Europe route, rates have jumped to around $5,000 per FEU, up from $2,500 per FEU before the conflict. Similarly, rates for the Asia-US West Coast route have risen to approximately $6,000 per FEU, compared to the previous range of $2,000 to $2,500 per FEU.
“Now, in practise, events have conspired to generate a far more profitable market for liner companies, a far more volatile market for beneficial cargo owners and shippers,” Richards says.
Drivers of the rate surge
The spike in freight rates is not attributed to a single factor, but rather a combination of elements including demand growth, supply chain disruptions, and importer behavior.
Richard pointed to a continued demand growth of around 5% as a key driver. Additionally, higher bunker prices have led to slower steaming, which effectively reduces available capacity. The loss of key hubs, such as the Jebel Ali port, has further contributed to supply chain disruptions.
Importers in the US have also engaged in the front-loading of shipments, adding to the congestion. Richards noted that port congestion has spread across South Asian and Southeast Asian hubs and is now concentrated in Shanghai.
“So, it’s been a far more explosive response in markets than many would have expected,” Richards says.
Richards described this as the third instance of an explosive response in freight rates, following the Covid-19 pandemic and the Red Sea crisis a few years ago.
Outlook for the second half of 2026
Despite some evidence of weakening freight rates on the Transpacific route, Richards does not expect a collapse in the near term. He attributes this resilience partly to elevated bunker surcharges, which are likely to remain high as oil prices stay above pre-conflict levels.
On the demand side, MSI remains optimistic, driven by the cost competitiveness of Chinese exports. Richards explained that the inability of the Chinese domestic market to absorb all goods produced by factories has created a positive supply shock for the global goods industry.
“The big demand side driver has been the cost competitiveness of Chinese exporters, the inability of Chinese domestic demand to absorb all the goods that their factories are producing,” Richards explains.
Regarding supply, growth in the first half of the year was relatively manageable at 5%, which was equal to demand growth. Richards noted that while deliveries will ramp up in the second half of 2026, the expected flood of new capacity will not arrive until 2027 and beyond.
Consequently, Richards believes that freight rates have likely peaked, barring any unforeseen events. He emphasized that the market is not expecting a collapse in the near term.
Charter market and newbuilding trends
The charter market continues to perform well, remaining a “vessel owners’ market.” Time charter rates have remained highly elevated since increasing in the first half of 2024 and continue to strengthen.
Liner companies are actively trying to add ships to their networks, particularly in the sub-8,000 teu segment. Richards noted that with relatively limited fleet growth in this segment, vessel owners are in a strong bargaining position, a dynamic that is not expected to change for the remainder of 2026.
Even if the freight rate market weakens, MSI expects a lag in the impact on the charter market and secondhand prices.
Regarding the newbuilding orderbook, Richards highlighted that the current ordering levels are not problematic. Around 1.9 million teu of capacity has been contracted this year, which is significantly lower than the 5 million teu ordered in 2025.
The shift in orders is towards smaller vessels, which are in high demand. Richards noted that a lot of ordering has come from Greek owners as well as some Chinese shipowners, which is consistent with the ageing profile of the fleet.
“But we do think that realistically from 2027, 2028, the wave of ships that we’re expecting to see hit the water, those are going to have a negative impact on overall market balances,” he says.
Richards warned that the issue lies in the number of very large and ultra-large newbuildings entering the fleet without a corresponding elderly fleet to be scrapped. He raised concerns about how the industry will find homes for these large ships, similar to the issues seen in 2015 and 2016.
The core question is whether there will be a pinch point in the containership cascade, where the volume of larger ships becomes too much for smaller trade lanes to absorb.
Source: Seatrade Maritime
Compiled from international media by the SCI.AI editorial team.
