The Strait of Hormuz blockade drives up container shipping spot rates. It is also causing global disruptions. MSI notes that the closure has sharply reduced container trade in the Middle East. This has raised rates worldwide and delayed market correction.

After four weeks, transit through the strait remains heavily restricted. As a result, shipping lines have suspended reservations, rerouted vessels, and unloaded cargo at alternative hubs. Therefore, major ports like Jebel Ali are affected, creating inefficiencies like those of the Red Sea crisis, but less severe.

At first, the market had a limited impact on the affected routes. However, as disruptions, congestion, and higher costs—especially fuel—accumulate, spot rate increases are now spreading more broadly.

MSI forecasts transit will reach about 70% of pre-conflict levels in Q2. Short-term disruptions and network inefficiencies will boost shipping lines' pricing power, leading to spot rates rising before moderating as networks stabilise.

MSI reports that in the past month, rates from the Far East to northern Europe rose 20%, and to the US West Coast by 15%.

Xeneta reports sharper increases: Far East–northern Europe spot rates are up 31% (US$2,904/FEU), and to the Mediterranean up 30% (US$4,333/FEU) since late February.

The impact is global. For example, even distant routes like Far East–US West Coast saw rates rise 29% to US$2,430/FEU. Meanwhile, port congestion in the Middle East is affecting key Asian hubs like Singapore, Port Klang, and Tanjung Pelepas.

Bunker price, another critical factor

Bunker fuel in Singapore, the main supply hub, is still available but costs twice as much as before the crisis. Shipping lines are adding surcharges and implementing measures such as slow steaming and alternative refuelling.

Drewry notes that disruptions in Hormuz, a route for 20% of global oil, have reduced fuel supply. This has driven up prices. Freight rates are likely to remain high. More increases are expected as costs are passed on.

Uncertain medium-term outlook

MSI warns that if the conflict drags on, an energy shock could weaken global consumption and container shipping demand. This would hit Europe and Asia especially hard. Spot rate gains could reverse in the year's second half.

This risk is heightened by weakening global trade: January data show Transpacific imports to the US down 7.7% year-on-year and Transatlantic down 3.6%, though Chinese exports to Europe grew. In summary, the Strait of Hormuz blockade is currently driving up shipping rates and strengthening carriers’ market power. However, the key takeaway is that whether these elevated rates persist or reverse will depend on how the conflict unfolds and its broader impacts on global trade and energy markets.