The war in Iran and closure of the Strait of Hormuz have sent freight rates soaring, as the geopolitical fallout culminated in a supply-demand imbalance, starting in early May. Though the conflict itself began in February, the impact on container shipping became notable weeks later with the combination of higher fuel rates, tightened capacity and longer shipping routes to avoid the region.
The Drewry World Container Index, the most widely used benchmark, has now increased over five consecutive weeks since late May, climbing 48% from $2,683 per 40ft container on May 21 to $3,969 in late June. Looking at Trans-Pacific specifically, spot rates for Shanghai to New York hit $6,769 per 40ft on June 18. That’s a 48% increase in three weeks. Shanghai to Los Angeles reached $5,142 per 40ft.
Since early May, rates for both routes have increased by approximately 90%. Drewry has said it expects rates to increase further in the coming weeks.
What’s Driving the Surge
The inflection point in early June was due to a few factors:
- Continued fuel cost fluctuations has prompted bunker adjustment factor (BAF) charges
- The U.S.-China 90-day trade truce, plus the looming end of Section 122 tariffs, have resulted in an earlier peak season as importers race to bring in goods before further geopolitical changes next month. The result is peak season surcharges (PSS). Drewry highlighted this in its June 4 release, saying “Demand is supported by shippers bringing forward bookings ahead of potential U.S. tariff changes expected in July.”
- Carriers are instituting more blank sailings to restrict available space and support pricing. Between June 4 and July 12, 39 blank sailings are expected across major East-West trades. Six were announced on the Trans-Pacific for the week ending June 18 alone. This is pushing spot rates higher as freight forwarders vie for limited space.
- FIFA World Cup 2026 has also contributed to demand as vendors in the U.S., Mexico and Canada looked to bring in event merchandise, promotional apparel and related goods in time to capitalize on the excitement.
- Commercial shipping through the Strait of Hormuz remained at approximately 10% of pre-crisis levels as of June 8. AIS data indicated that container ship traffic through the Strait of Hormuz remained limited on June 18. Major shippers like Maersk, CMA CGM, MSC and Hapag-Lloyd remained cautious despite the U.S.-Iran memorandum of understanding signed on June 17, with the ceasefire set to take effect the next day. In addition to the disruption itself, war-risk surcharges and displacement port costs are now described by freight operators as the standard cost structure. They are no longer temporary surcharges but a permanent feature of the pricing environment.
Surcharges You Need to Factor In
The Drewry rate is the base ocean freight figure. It does not tell the whole story. For Trans-Pacific shipments in June 2026, apparel sourcing teams need to factor in a slate of surcharges on top of base rates that did not exist three months ago:
- Peak Season Surcharge (PSS): $1,000 per 20ft, $2,000 per 40ft container — effective from multiple carriers including Maersk (June 17), ONE (June 1), and MSC (June 15)
- Bunker Adjustment Factor (BAF): climbing rapidly to offset year-on-year increases in very-low-sulfur fuel oil costs driven by the Hormuz energy disruption
- General Rate Increase (GRI): successfully implemented June 1 across multiple carriers, with further GRIs filed for July 1
- Heavy Load Surcharge: Maersk has announced a new surcharge effective July 1 for overweight cargo on Far East Asia to U.S. East Coast services
- IMO 2026 environmental surcharges: carriers will begin building these into pricing from September 2026. Companies able to lock in long-term contracts before then can avoid this additional layer.
What that means for a 40HQ container from Shanghai to New York at the Drewry spot rate of $6,769 plus a $2,000 PSS is $8,769 before BAF, GRI, destination charges or customs clearance costs. Brands budgeting at $4,500–5,000 all-in based on Q1 2026 costs are looking at a landed cost shock of 50–70% on ocean freight alone.
The Story on Air Freight
Air freight did not follow the steep trajectory of shipping rates. Air cargo from China to the U.S. is running at approximately $7.73 per kg, up modestly from May but essentially flat relative to the ocean surge. This indicates that June’s spike was more capacity-and-demand related, not a fuel shock. While prices ticked up due to fuel costs, capacity from front loading also played a part.
A relatively steady air freight costs also means the gap between ocean and air has narrowed. Practically speaking, for fashion items, importers need to recalculate the economics of air versus ocean. For instance, if an ocean shipment faces a four-week delay from rolling (cargo getting bumped to a later vessel), and your retail window opens in September, air may be cheaper than the cost of a missed season.
Upcoming Milestones
Since Drewry has stated it expects rates to increase further, keep these dates in mind:
- July 1: Additional GRIs filed by multiple carriers take effect, creating a step-up in base rates if demand remains strong.
- July 24: Section 122 tariffs expire and potential replacement Section 301s could prompt a second wave of frontloading in late July as importers race to clear goods.
- August–September: Rates could stabilize, according to analysts, after the initial frontloading wave clears. New vessel deliveries should ease equipment shortages in East China from August onward.
- September: IMO 2026 environmental surcharges begin, adding a further structural cost layer.
What to Do Now
- Rebuild your landed cost model immediately based on the latest rates and surcharges.
- Confirm space allocation this week. Sailings from China and Vietnam are fully booked through late June, putting your goods in danger of rolling.
- Recalculate the air versus ocean decision for time-sensitive Q3 goods. Run the numbers by category.
- Separate the surcharges from the base rate in all supplier negotiations to give you better visibility into costs.
- If you have long-term contracts up for renewal before September, lock them now before IMO 2026 surcharges hit.
- Watch the July 1 GRI and July 24 Section 301 announcement as the two critical forward signals to help predict August capacity.
