Freightos Baltic: Ocean freight market wavers between geopolitical calm and faltering demand

The global ocean freight market traversed a week of stark contrasts, as shipping players weighed an unexpected easing in Middle East tensions against a rapidly deteriorating container trade outlook.

Markets opened the week on high alert following a surprise US airstrike on Iran’s nuclear facilities, stoking fears of retaliatory action, including a potential closure of the Strait of Hormuz—an artery for nearly 20% of global oil flows. However, geopolitical anxieties eased abruptly midweek after Washington brokered a ceasefire agreement between Iran and Israel. While the truce remains delicate, the announcement temporarily quelled fears of escalation. 

With the immediate regional risk receding, market focus pivoted back to structural headwinds—chiefly, overcapacity and waning demand on major east-west container lanes. The brief post-12 May surge in bookings—sparked by a temporary de-escalation in US-China trade tensions—has since lost momentum. Carriers, buoyed by early signs of recovery, had ramped up capacity on the transpacific corridor by 13% versus March–April levels, but the demand rebound has not held.

As a result, spot freight rates are now under sustained pressure. Rates to the US West Coast dropped 7% last week, with daily averages falling sharply to around $3,500 per FEU—down from $5,800 just a week prior. Daily rates to the East Coast also softened to $6,300/FEU, down nearly $900 in the same period.

On the Asia-Europe corridor, spot rates offered a short-lived reprieve, rising 6% to $3,100/FEU. But signs of cooling have already emerged. Asia–Mediterranean rates reversed course, falling 9% to $4,400/FEU—effectively erasing gains made since early June.

Despite entering what is traditionally the peak shipping season, the outlook remains subdued. The combination of elevated vessel supply, uneven demand recovery, and looming US tariff expirations—set for 9 July for non-China origin goods—is limiting carriers’ ability to sustain or implement mid-month rate hikes.

As one industry analyst noted, “The geopolitical flashpoint may have passed, but the fundamentals are now calling the shots. Rate momentum is fragile—and fading fast.”

Read more on Freightos