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As 2026 commenced, the market consensus was becoming clear: overcapacity was building, demand was softening and freight rates were expected to decline. That thesis has not disappeared — but it is now colliding with a major geopolitical supply shock.

 

Since late February, the Strait of Hormuz has effectively closed, with vessel transits collapsing from a pre-crisis average of 95 per day to just 2 as of May 20. For the first time in modern history, both Middle East maritime corridors are simultaneously disrupted. The result is a freight market where overcapacity and supply-side disruption are pushing in opposite directions, with impacts varying sharply by corridor.

 

Europe remains volatile. Asia–Europe rates stabilised through April but have started firming into peak season. The prospect of a near-term Red Sea normalisation has effectively disappeared.

 

Across Asia-Pacific, congestion and rerouting pressures continue to intensify. China port congestion is now having a direct impact on Asia–Australia trade lane reliability, particularly across services operating from Shanghai, Ningbo, and South China export hubs into Australian East Coast ports. As carriers continue reallocating vessels away from disrupted Middle East routes, Chinese ports are experiencing growing berth pressure, equipment imbalance, and schedule compression. The result is a widening gap between published schedules and actual vessel performance.

 

India’s west coast ports are reporting delays of up to 49 days, while Jeddah is increasingly absorbing UAE transhipment cargo.

 

North America remains the most stable major corridor. Transpacific rates rose again in mid-May, supported by improving US–China trade sentiment following the Trump–Xi summit. Markets are increasingly pricing in a short-term volume surge ahead of the November tariff truce expiry, although Taiwan remains the key geopolitical risk capable of rapidly reversing current stability.

 

Global freight networks remain functional, but operating conditions are becoming increasingly constrained. Carriers continue tightening effective capacity through blank sailings and vessel reallocations, while elevated fuel costs and surcharge volatility are adding further pressure to landed costs. At the same time, demand for premium direct-call services is strengthening as importers place greater emphasis on schedule certainty and cargo reliability over purely cost-driven routing decisions.

 

For Australian importers and exporters, the operating environment remains stable but increasingly disruption sensitive. Earlier planning, greater timeline buffering, and reduced reliance on spot-market pricing are becoming essential risk management measures.

 

Our teams will continue to deploy resources to minimise negative impacts where possible.

 

Please contact our teams directly with any questions.

 

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