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Transpacific West Coast rates climbed 19% last week to above $5,700/FEU, with intraweek pricing crossing $6,000/FEU. East Coast rates rose 13% to $7,400/FEU before moving past $8,000/FEU daily, already above last year's peak season high. Asia-Europe gained 13% to $4,700/FEU and Asia-Mediterranean rose 16% to $6,300/FEU, both well above year-ago comparables. Mediterranean pricing is now near GRI and PSS targets; European rates remain roughly $1,000/FEU short of carrier aspirations.

Carriers are targeting Asia-Europe rates $3,000/FEU above current levels in July, with Mediterranean prices $1,000-2,000/FEU higher and secondary trades also in scope. Those targets face real risk as the current surge is largely frontloaded demand compressed into a narrow window, driven by shippers pulling cargo ahead of BAF increases, Section 122 expirations, Section 301 introductions, and July manufacturer price hikes. Several observers expect bookings to peak in June, which would mean stiffer resistance to July GRIs than carriers encountered in June.

Red Sea diversions and port congestion are absorbing effective capacity and supporting rates for now, even as the global fleet grows. But with frontloading implying an early demand ceiling, the gap between announced targets and market clearing levels could widen quickly once booking momentum fades.

The US-Iran MOU has taken pressure off energy costs. Crude is around 5% above pre-conflict levels, bunker rates are down 25% from their March peak though still 40% above February, and jet fuel has fallen more than 40% from its high. Hormuz transits have increased since the announcement, though recovery remains well below pre-war volumes and Iran has signalled intent to retain control over the Strait under any final settlement. Container carriers are expected to resume feeder services into the Gulf before committing to long-haul port calls, and that caution is unlikely to lift quickly even as tanker traffic recovers.

Written by: Farid Muzaffar