The Container Market Is Booming Because It's Broken

On the Shanghai–Los Angeles route, container rates rose 31% in four weeks, reaching $4,565 for a standard forty-foot box by the last week of June. On the Asia–Europe corridor, Shanghai–Genoa rates climbed 10% in a single week to $6,360, according to Drewry's World Container Index. Carriers are calling it an early and unusually sharp peak season. It is also evidence of something else: more than two years after the Red Sea crisis first forced container lines off their standard route, the industry still has no settled answer to what a container voyage should cost.

That uncertainty has a specific cause, and it has not resolved on the timeline anyone expected.

The Detour That Didn't End

The last Houthi strike on a merchant vessel, the Minervagracht, was on 29 September 2025. Forty-three days later, the group announced a suspension of its maritime campaign, conditional on developments in Gaza. Carriers took the pause as an opening: Maersk sent a vessel back through the Suez Canal in December 2025, its first transit since early 2024, and CMA CGM said it would return two services, MEDEX and INDAMEX, to Suez routings from January 2026. In the first week of that January, Suez Canal transits were still roughly 60% below the same week in 2023, according to shipping analysts at BIMCO and Lloyd's List — but the direction, at least, looked like recovery.

It did not hold. The wider escalation across the Gulf in the following months put rerouting decisions back under the same caution that had governed them since 2023, and by June, major carriers had not resumed scheduled Suez transits; Lloyd's List reported only a single ultra-large containership passage through the Red Sea late in the month as a tentative, unconfirmed signal rather than a resumption. Egypt's government has lost more than $8 billion in canal revenue since the crisis began, by conservative estimates. Industry consensus, per multiple trade publications tracking the route, is that full rerouting could persist through 2027.

The cost of that caution is embedded in freight prices. Asia–Europe rates are running 25–40% above pre-crisis levels; Asia–US East Coast rates are 15–25% higher. On a standard forty-foot box moving from China to the US East Coast, the Red Sea premium alone adds $800 to $1,500 in freight and insurance. None of this is new information to shippers. What is less widely priced in is how long it will last, and what happens to a market this tight when a much larger fleet arrives.

A Fleet Ordered for a Different Market

Container lines never stopped ordering ships through the disruption — if anything, the opposite. The orderbook-to-fleet ratio has reached 31.6%, according to Clarksons Securities, up from 27.5% at the same point in 2023 and the highest level since 2010. Global containership capacity has already grown 19%, or 5.1 million TEU, since the third quarter of 2023.

The delivery schedule is uneven in a way that matters. Clarksons data show new capacity easing slightly in 2026, to 1.7 million TEU from 2.1 million in 2025, before surging to 2.8 million TEU in 2027 and 3.5 million TEU in 2028. In other words: the market gets a brief pause this year, then absorbs the bulk of a decade-high orderbook in the two years immediately after most forecasters expect rerouting to still be in effect.

If those two events — a fleet that size arriving, and a return to normal routing — happen in the same window, the correction in rates could be sharp. If the detour outlasts the ship deliveries, owners get a few more years of elevated, if volatile, earnings. UNCTAD's Review of Maritime Transport 2025, published in September, described the resulting price behaviour bluntly: freight rate volatility is "the new normal." The Shanghai Containerized Freight Index averaged 2,496 points in 2024, up 149% on 2023, with spot rates briefly touching $3,600 per container that July — levels close to the pandemic peak before moderating toward year-end. The report noted that developing economies, more exposed to swings in both import and export freight costs, absorb a disproportionate share of that volatility.

Panama's Reversal, and a New Risk

A second chokepoint has moved in the opposite direction, which complicates the picture rather than simplifying it. Panama's drought, which forced the canal authority to cut daily transit slots through 2023 and 2024, has reversed sharply. Gatun Lake, the canal's main reservoir, reached 88.9 feet by 7 February 2026 — well above its five-year February average of 85.3 feet — forcing a preventive spillway release. January 2026 traffic reached 1,049 ocean transits, up 3.8% year-on-year, with a daily average of 33.84 vessels against a maximum sustainable throughput the authority puts at 36 to 38.

Even so, the canal authority's administrator has said transit levels across all vessel categories have not returned to pre-drought norms. And a new threat is already on the calendar: NOAA issued an El Niño Watch in April 2026, projecting the pattern's emergence by mid-year and persistence through year-end, with roughly a one-in-four chance of a "very strong" event. A moderate El Niño would tighten water availability during the canal's critical wet season, the same mechanism that produced the 2023–24 restrictions — meaning shippers who leaned on Panama as a Suez alternative are watching a second weather-driven capacity constraint re-enter the conversation within the same year.

What the Trade Numbers Underneath Say

Freight costs do not move in isolation from trade volumes, and the WTO's Global Trade Outlook, updated in March 2026, points to a broader deceleration. The organisation forecasts global merchandise trade growth slowing to 1.9% in 2026, down from 4.6% in 2025; combined goods and services trade growth is projected at 2.7%, against 4.7% the year before. The WTO's economists flag conflict in the Middle East, and its effect on energy prices, as the main downside risk to that forecast: in a scenario where oil and LNG prices stay elevated through the year, merchandise trade growth could fall to 1.4%. A shorter period of regional disruption combined with continued AI-driven demand for enabling hardware could instead push growth as high as 2.4%.

The range matters for anyone pricing freight forward. Higher energy prices raise bunker costs directly, at the same time as they tend to coincide with exactly the kind of regional disruption that keeps container lines off their shortest routes. The scenarios are not independent; they compound.

Who Is Carrying the Financing Risk

The least visible part of this story sits on bank and trade-finance balance sheets. The Asian Development Bank's latest Global Trade Finance Gap Survey, published in December 2025, found the global trade finance gap holding steady at $2.5 trillion — about 10% of global trade, down only marginally from 10.6% previously. That stability is deceptive.

Roughly 80% of the banks surveyed expect demand for trade finance to rise as companies diversify suppliers, deepen intra-regional trade, and rebuild supply chains around longer, less predictable routes — precisely the adjustment container shippers are living through in real time. SME access has improved on paper: rejection rates for smaller companies seeking trade finance have fallen to 41%, now close to the 40% rate large and mid-cap corporates face. But a converging rejection rate in a market where financing demand is rising, transit times are less predictable, and freight costs swing by double digits in a week is not obviously good news — it may simply mean banks are tightening terms across the board rather than easing them for smaller borrowers specifically. The ADB's own recommendations, including expanding trade finance registers and building out deep-tier supply chain finance tied to large buyers' creditworthiness, read as a response to a gap that examiners expect to widen rather than close.

The Open Question

Every actor in this chain — carriers, charterers, insurers, banks financing letters of credit against cargo still weeks from port — is currently pricing risk against a market that is tight for reasons that have little to do with underlying demand. Rerouting, weather in Panama, and a regional conflict thousands of miles from any container berth are doing more to set today's freight rates than growth in the volume of goods actually being moved, which the WTO expects to slow this year regardless of how the other variables resolve.

That arrangement can hold for a while. It has already held for over two years. The question worth asking is what the market looks like once the orderbook's heaviest years, 2027 and 2028, deliver ships into a route structure that may, by then, have reopened — turning today's capacity shortage into tomorrow's oversupply at the same moment global trade growth is already decelerating. Nobody pricing a three-year charter, a trade finance facility, or a hedged freight contract right now can fully answer that. Most are pricing it anyway.