Episode #27: The Blockade Paradox and Your Missing Tariff Refunds

Get your freight Christmas sweater on (yes, even in April), because the Straits of Hormuz are getting chilly🥁. 

We’re diving into why the Hormuz blockade(ish) your ocean rates are staying surprisingly grounded while jet fuel prices are pulling an Artemis II.

Judah explains the "Inverse Crisis Correlation"-  we have so many ships due to overcapacity that even a Middle East blockade can't kick rates into high gear. 

Meanwhile, air cargo is feeling the heat as jet fuel prices double, causing airlines to slash flights faster than my kids lose their left shoes. 

Also...refunds!

The IEEPA refund portal is finally opening, and Uncle Sam owes you some lunch money.

Get the full April monthly deepdive here https://www.freightos.com/logistics-technology-insights/industry-updates/global-freight-outlook-april-2026/

This podcast is a little experiment from Freightos—and may not be around forever—so if you dig quick bites of freight wisdom, let us know. 

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Transcript

SPEAKER_01 0:00

So uh jet fuel, um about 20% of it comes from the Gulf and prices for jet fuel have more than doubled. And you're starting to see that um, you know, resulting in changes in the market.

SPEAKER_00 0:14

All right. I got a joke for you to kick this off. When is a blockade not a blockade when ships keep going through? Hey oh. So so that one wasn't particularly difficult to come up with. Uh it was inspired. I don't know if you were wondering, Judah, it was inspired by the Straits of Permuz. Turned to them. Oh. Okay. It's all making much more sense. Uh let's let's start there. The big story is still the Straits of Hermuz. Uh we talked about this in the past, right? The ceasefire has now held for a while. It's supposed to expire in two days. We're recording this on Wednesday, April 15th. Uh, and some, but still much fewer vessels are going through the straits. Uh, what is the latest there on the ground or in the water?

SPEAKER_01 0:54

Yeah, so uh like you said, the ceasefire was set for two weeks, two weeks expires shortly. Talk started towards the early party ceasefire, but quickly collapsed, and then that resulted in the U.S. implementing this blockade, so kind of steps in the in the other direction where there was hopes of maybe during a ceasefire there being more transits. Um so with the blockade, there are fewer transits because the US uh says it will block stopped vessels that have, you know, called at Iranian ports or are linked to Iran in in some way. So that reduces uh the number of vessels for now. Um and that, of course, puts additional pressure on oil prices because whatever oil tinkers were um being exported from Iran, we're kind of adding supply to the market. And that for now is is restrict.

SPEAKER_00 1:41

These developments impacted ocean freight rates. This was one of the biggest ha moments for me from last week when we were speaking, uh, is that rates are shockingly low, right, compared to where they've been in the past with a international crisis that is top of the headlines every single day, related to maritime travel and maritime freedom. Rates are really low right now, right?

SPEAKER_01 2:05

Pleased to hear that there was more than one aha moment from last week. That's great. Uh rates are certainly going up, but they're not going up as high as they did during the Red Sea, and they're also don't seem to be going up as high as carriers are aspiring or you know, thinking or maybe attempting to push rates.

SPEAKER_00 2:23

So shocker are real shocker.

SPEAKER_01 2:25

So there there are rate increases. So for example, last week's transatlantic rates, which really hadn't changed much, they jumped by 50%. And that's basically because in in the US, the FMC requires a 30-day um uh you know advanced warning of emergency uh uh rate increases. And so those just you know, those were announced back in March, they went to effect now. Then prices jumped from$1,400 per FEU to$2,100. And there are more increases scheduled for later this month in early May, ranging from another$1,000 to$2,000 per determiner, which are you know um significant. Uh Transpacific rates, if you look from the beginning of the war until now, to both coasts have only increased about$700. It is significant, but it's not thousands of dollars uh per FEU. We're at$2,500 uh to the West Coast and$37 to the East Coast. Carriers are announcing additional price increases there as well, significantly from like$500 to$2,000 per container later this month or in early May. But if we looked at similar attempts, and I really haven't seen a lot of GRI attempts on the Trans-Pacific, Eastern Europe and to the Mediterranean rates are only$200 higher than they were at uh$3,800, and they're$400 higher than they were at the beginning of the war to Europe at$2,800. But both those levels are at least$1,000 lower than some of the GRIs that were attempted to be introduced, like you know,$4,000 to Europe,$5,000 to Mediterranean or even higher. So it seems like yes, rates are certainly increasing, but they're not increasing as high as they were. The other issue is though is fuel availability. And we're already seeing, um, especially in some of the Asian hubs, that they're really dependent on on oil from from the Gulf. Um, we're seeing reports of some vessels, you know, uh uh skipping those port calls or stopping somewhere else first. So you're starting to see some that some vessels operational too.

SPEAKER_00 4:19

Interesting. And and the the primary force that's depressing rates compared to the magnitude of the crisis, of course, as we've said a couple of times, overcapacity, right? Just the fact that we're continuing to see more and more vessels coming out, together with kind of fairly middling demand, uh, not not a great recipe. So I guess you know, rates continuing high up there. Uh I know, you know, the great segue from the fuel that you were just talking about, air cargo, much more dependent on that. Um how has the crisis been playing out in air cargo, but from a pricing perspective, and then also from a traffic perspective through Middle East hubs?

SPEAKER_01 4:54

So from a traffic perspective during the ceasefire, you know, if this was two weeks, there was some hope that maybe the number of flights would increase out of the Middle East from non-gulf carriers, and that really hasn't happened. There hasn't been enough of uh in assurance, uh, especially because of how fragile everything is, to see uh non-gulf carriers increasing uh flights through the Persian Gulf. We do see a continued recovery by the Gulf carriers, and they're very significant, obviously, for Middle East traffic, but also just for general um Asian Europe traffic and other East-West. But even so, some of the estimates are only that you know there's been only something like a 40% total uh recovery in terms of flights. Um and a big chunk of that is probably passenger travel, right? Obviously, tourism and passenger travel to the Gulf is is um is taking and that has an impact on cargo as well. And that's likely not to come back, even if there is a ceasefire until tourists decide that they're coming back. So that's another thing to look for. Um as you said, in terms of in terms of uh impacts on rates, uh yes, it's significant. So uh jet fuel, um about 20% of it comes from from the Gulf. Prices for jet fuel have more than doubled, and you're starting to see that um you know resulting in uh changes in the market. So, first of all, in terms of just available supply, there are places like Vietnam and Myanmar that are reportedly already running low on fuel. Vietnam Airlines has uh canceled 20% of its flights. Cathay Pacific is reducing 2% of its flights starting at mid-May to conserve fuel to also reduce costs. There's um estimations that Europe could face a shortage as early as May. Um and even though North America is less exposed in terms of actual supply, costs are increasing. And Delta and United have announced that they're canceling uh some flights or flights that they that are generally unprofitable, they're reducing bills as well. So we're starting to see those um those types of things play out. We're still seeing rates you know much higher than they were, obviously. So Southeast Europe rates above$5. It's double what they were before the war. Southeast Asia Europe 50 per uh 60% higher and also above$5 uh per kilo. China and North America, meanwhile, level now at about$6.30, but it's only 7% higher than they were uh before the war, but they had gone to a peak of$7.50. So on some ladies, we're seeing um, you know, capacity additions or other ways that just adjustments had played out, that rates are coming down a little bit, but in general, rates are staying quite validated and uh are continuing to climb, maybe not as quickly as they had been initially.

SPEAKER_00 7:31

One interesting thing to point out, and what you were just talking about is that I know in the beginning of the crisis when the larger Gulf state aircraft, uh airlines were not flying, some European or international airlines were picking up some of the slack on the non-origin or Middle East origin or destination. And it sounds like that actually might start to flip a little bit if airlines from the Gulf states can travel around right now that they've started to increase their capacity and be able to fly around a little bit more and they have right, they have fuel just stuck in the Gulf. I I wonder if we'll start seeing that like start to flip a little bit. Um, you know, this is all um strangers for moose related, but but let's talk for a second about uh the trade wars. I had a really interesting call yesterday with a freight forwarder about AIPA refunds and and kind of the process around that and how that's gonna go down. So yeah, curious, like how is that shaping up for importers that uh have been paying the toll and the tariffs for imports to the United States?

SPEAKER_01 8:24

So in terms of refunds, there has been uh developments in progress. So there are, you know, there was uh an order by the Corg International Trade in the US that refunds need to be that the uh customs border protection need to start uh the refund process back in in early March and that the response to this is gonna take time. But just this week there was an announcement by the CBP that the um the process will get underway starting April 20th. So they opened a new portal in the ACE portal for those familiar with with what go what goes on with customs filings uh called CAPE, that's upon April 20th, and essentially you submit your documentation and your request via CATE, and it will take something like 45 to as much as 90 days for a refund to be issued after that. There's still questions about how exactly this is gonna be implemented. There's still parts of this that are manual, but this is definitely steps forward, and you know, it looks like refunds are gonna happen. In the meantime, though, um kind of the stock gap since EPA has been uh wasn't validated is a section 122 that put 10% global tariffs on all imports coming into the U.S. And just in the last couple of weeks, there have been multiple lawsuits challenging the validity of Section 122. Section 122 is part of the trade law from 1974, and it allows tariffs to be implemented when there's a balance of payments uh problem or or issue or concern. And this was back when the U.S. was still in the gold standards, or there are challenges to, you know, the justification of using it now. Um that being said, in fact, you know, even if it's invalidated, it'll be appealed, it won't be you know struck down until it goes to the Supreme Court and it's going to expire and the end of July in any case, so it's not probably not gonna happen before then. And in the meantime, uh the administration is looking at other modes to replace the EPA tariffs through what's called Section 301s, which we're looking at specific issues for specific countries. And there was just a statement by the uh Treasury Secretary who said that those will be in place by early July. So it looks like there's not going to be kind of a gap, and they're sort of being working hard to make sure that EPA is um replaced by none of means.

SPEAKER_00 10:30

Awesome. All right. Well, thank you so much for this, Judah. Um, as a general reminder for everybody here, if that you enjoy it, the best way you can say thank you is uh sending us a lot of money. Uh you don't want to do that, you can just uh leave us a uh comment, recommend us to a friend. Uh, we aspire to be the best short podcast to get your information every single week. Uh, help us do that. Uh, we really enjoy doing this. Um, there's also a monthly webinar that we run uh from Fredos on what has happened within the industry. You can come to the Frados website. We'll drop a link uh in the show notes in order to come see that uh if you want to get a little bit more of a deep dive, uh, also starring Juno. Uh with that, thanks everybody. Have an awesome day.