Seatrade-Maritime: Indexes’ uncertain response in a volatile container market

Conflict in the Arabian Gulf has heightened shipper ambiguity, raised concerns about port congestion and heightened fears of equipment shortages, according to analyst reports.

Consultant Drewry Shipping reported double digit rate increases in both the Asia-North America and Asia-Europe trades in recent weeks as China’s workforce returned to factories following the Lunar New Year holidays.

An increase in average rates from Shanghai to Los Angeles, from $2,191/feu reported on 28 February, has increased to $2,503/feu reported on 5 March by Drewry.

Xeneta’s chief analyst Peter Sand, however, says the online platform has seen a different scenario, although it should be noted that Xeneta’s rates are recorded to and from regions rather than port to port as is the case with Drewry’s spot rate data.

“The Pacific demand is very weak. Even after four weeks for sub-par capacity being offered, rates are not reacting,” said Sand.

Xeneta data shows a decline in average Far East to US West Coast spot rates from $2,123/feu on 5 March to $2,062/feu on 12 March, even as offered capacity was down 5% on 5 March and 12.2% this week.

Far East to East Coast North America showed a similar decline according to Xeneta data, falling from $2,870/feu to $2,846/feu as offered capacity declined 7.1% and 8.1% in consecutive weeks.

A similar confusion in the market dynamics exists on the Asia to Europe trades with both Drewry and Xeneta data showing a different dynamic over the past week of the Iran conflict.

Drewry data shows a whopping 19% week-on-week increase to the 12 March from $2,052/feu to $2,443/feu, and a 10% rise from Shanghai to Genoa, at $3,120/feu.

Xeneta’s Far East to North Europe rates have stagnated over the period, at $2,336/feu, $2 down week-on-week. While freight to the Mediterranean from Asia was reportedly $3,536/feu on 12 March compared to $3,570/feu the previous week.

“The knock-on effects on the Asia to Europe trades related to sentiment – fear and uncertainty – as well as the rising port congestion where trade corridors meet up,” explained Sand. 

Counter-intuitively, European spot rates have stagnated even as offered capacity has fallen substantially in consecutive weeks, by 12.7% and 5.2% on 5 and 12 March respectively. And 3.3% and 1.9% to the Mediterranean. Average rates from the Far East to European destinations are increasingly likely to rise the longer that the conflict in Iran continues, however, as port congestion builds regionally and freight levels to Gulf ports drops off substantially.

According to Drewry data around 33m teu is handled across Gulf ports annually, but with the Straits of Hormuz effectively closed to shipping Drewry has analysed the possibilities of using by-pass ports to maintain both import and export services to countries in the Gulf region.

A Drewry analysis of whether the region’s alternative ports and  inland logistics infrastructure can realistically absorb displaced container volumes, said surging container diversions from the Strait of Hormuz since late February 2026, “finds a region structurally exposed by decades of underinvestment in bypass corridors.”

That analysis showed that only Khorfakkan has the capacity to meet a significant level of cargo movement, with 4m teu of latent capacity, just 130 km from Dubai, connected by dual carriageway.

“UAE authorities have already implemented emergency customs clearance procedures allowing direct road transfer to Jebel Ali and Abu Dhabi free zones – a pragmatic measure that validates the corridor’s pre-existing role,” said Drewry. Even at Khorfakkan road capacity remains uncertain and is likely to be a fraction of Khorfakkan’s physical port capacity headroom, added the consultant.

Saudi Arabia’s Red Sea ports at Jeddah and the King Abdullah Port offer a combined 10m teu but they are some 950km distant from Riyadh and other major population centres in the Kingdom.

All Red Sea freight would need to be delivered by road as the rail link to Riyadh and other destinations remains on the drawing board, in spite of the near 40 year threat of disruption to Gulf traffic.

“For Qatar, Bahrain, Kuwait and Iraq, none of which have viable overland bypass routes that avoid either Hormuz or Saudi territorial transit, no adequate alternative exists,” said Drewry.

Meanwhile, global supply chains do not stop even for major conflicts, though major lines have stopped taking bookings for Gulf port freight, and right now vessels are heading to the Gulf, but it remains unclear where this cargo will be off-loaded.

“Alternative ports are not equipped to deal with a sudden increase in volumes arriving against chaotic schedules, so severe congestion is expected, said Sand, “Port congestion ripples across supply chains, so major transhipment hubs in Asia, such as Tanjung Pelepas and Singapore, will be impacted.”

Drewry’s weekly Intra-Asia rate index has, so far, had a muted response to the Gulf conflict, declining 5% in the second week of March. The Shanghai to Nehru Port, in India, was the only trade to register a substantial response to the Iran war, more than doubling since 27 February, from $900/feu to $2,167/feu by 13 March.