As bad as covid?
Quite possibly.
China to US East coast is close to 1100 USD , 7% below the covid peak, China to US West coast is scratching 8000 USD? China Europe rising 250% and then down 30%.
So what's going on?
Let us start with a bold statement. Nobody predicted the freight market of 2026. Not even us; although we did try!
Coming into the year, analysts broadly agreed that oversupply and weak demand would keep prices flat or falling. And indeed, at the beginning of the year, this forecast was realized. Transpacific dropped by 30% or so and transpacific spot prices stabilized at around 2000 USD. Even the geopolitical disruptions in the Middle East barely moved the market: rates rose from USD 2,000 per FEU in January to just USD 2,400 by April. Carriers introduced the familiar roster of surcharges (EFS, EBF, EBR), but to no avail. They were able to increase prices, but were struggling to recover all of the cost increases. Demand was simply not there and supply was aplenty, so shippers had the leverage to push back.
From the beginning of June 2026, prices started climbing much faster. So what happened? The simple narrative is, the prices climbed due to increased bunker costs. But prices of VLSFO in Singapore were approx. 400 USD in January, before the war, and 900 USD in September. The near-doubling of costs absolutely contributed to increased freight prices. But it cannot explain the 300%+ price increase we are currently witnessing.
Let's look at other options...
Whenever there is a geopolitical disruption there is a network change. And indeed, there has been a significant network change, but the Middle East represents less than 20% of the global volume and essentially no transpacific service passes through it.
Against most expectations, volumes were very high in July – China to Europe volumes were 12% YoY. China – US July numbers were also up, but only by a modest 4%. Not a record high, but a clear signal of normal peak season nevertheless. This might be part of the price increase explanation, but unlikely to be the whole story either, particularly on the transpacific. If demand was the main driver then, by definition, the price increases into northern Europe would be higher than the ones towards the US West Coast. This, however, is simply not the case.
What is a unique feature of the transpacific market?
It’s the most active tropical cyclone basin in the world. According to records, from 1991 to 2020, the Western Pacific averaged 26 named storms, 16 typhoons and nine major typhoons per season. And this season has been particularly bad.
Four storms in seven weeks left no room to recover and have led to delays and cancellations. This likely explains most of the diverging behaviour between the trade into Europe and US. But not all.
It is interesting to note that the US East coast has been rising even more aggressively than the West coast. Some of this might derive form the forecasted record el Nino and the initial introduction of vessel restriction on the Panama Canal. Assuming the long-term weather forecasts are correct, this will indeed be a big issue in the coming year.
For now, it’s far more likely that a combination of the previous considerations are to hold responsible.
At the end of the day, none of the issues discussed are independently significant enough for the prices to jump this high. However, the sum and compounding nature of all them together is.
This is a perfect example of a death by a thousand paper cuts.
For carriers, the question is how much of this year's gains can be defended once the disruptions unwind.
For shippers, the fundamentals predicted at the end of 2025 remain the same. Too many ships and an uncertain economy which should translate to prices being pushed down.
Barring, of course, not one but many coinciding climatic, or geopolitical adversities, we still think the 2027 tender season will sway in favour of a shipper’s market.
Whichever side of the negotiating table you sit on, the market will move before the tender season does, and that season is weeks away, not months. Get in touch to see where your rates stand today, so 2027 doesn't catch you the way 2026 caught everyone else.