Container Bytes #40: The Ceasefire Collapse and July's Record-Breaking Volume

Welcome back to Container Bytes! 📍 We are hitting Episode #40, and the Strait of Hormuz has officially circled back to square one. The fragile June ceasefire has disintegrated into a high-stakes operational standoff. While the US asserts the waterway remains open via its southern channel, reality on the water tells a completely different story: drone attacks and naval skirmishes have effectively reduced commercial transits to a crawl.

In this episode, Julia Frohwein and Judah Levine unpack the immediate logistics fallout. We dissect the sudden re-implementation of the US naval blockade alongside President Trump’s recent social media proposals regarding a 20% cargo fee and military guardianship of the channel. For regional container movements, this means an indefinite extension of land-bridge dependencies and alternative routing through the UAE, while global ocean carriers like Maersk and CMA CGM prepare for another Red Sea U-turn.

We also evaluate a significant divergence in the global spot market. Crude and bunker fuel prices have rebounded roughly 10% this week, reversing their June declines. However, the overarching story remains demand-driven. The National Retail Federation (NRF) just projected that July will mark a historic, record-breaking monthly influx of 2.47 million TEU—surpassing even the pandemic-era peaks. Yet, with NRF data pointing toward sharp 10% month-on-month drops for both August and September arrivals, we analyze whether the early peak season has officially reached its ceiling, and how a severe weekend typhoon in North Asia could keep spot prices elevated despite cooling demand.

Chapters: 

• 00:00:00 — Back to the Beginning: The collapse of the June ceasefire. 
• 00:01:15 — Social Media Policy: Deconstructing the proposed 20% cargo transit fee. 
• 00:02:15 — The Red Sea U-Turn: Why ocean alliances are rolling back Suez transit plans. 
• 00:03:30 — Fuel Rebound: Crude and bunker prices climb back to mid-June baselines. 
• 00:04:45 — The 2.47 Million TEU Milestone: Breaking down July's historic arrival numbers. 
• 00:06:00 — The Peak Season Ceiling: Analyzing the NRF’s 10% August volume drop forecast. 
• 00:07:15 — The Supply-Side Constraint: How North Asian typhoons are preserving the rate floor.

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. 

For more detailed weekly freight updates delivered straight to your inbox, check out our weekly freight email. Want the freshest freight data on demand? Hit up terminal.freightos.com.

Transcript

SPEAKER_00 0:00

Hello and welcome to today's episode of Container Light where you want to have an update on the latest infrared. I'm Judah Rowan joined as always by Judah the outfit expert. Judah, how are you today? I'm also doing okay. All right. So for a change, let's start with the straight of home. Like we discussed last week, things already were shaky. There was more Iranian attacks and there was US retaliation. And seemingly over the last week or so it's gone from bad to worse. Are we back to where we were before the June ceasefire?

SPEAKER_01 0:29

So um in many ways, yes. So as you said, there'd been uh Iranian attacks trying to establish itself as the authority over the strait, meaning that any vessels that want to come or go have to get their permission, have to pass through the kind of narrower channel on the northern part of the strait along the coast of Iran, um, which was the case during the um, you know, before the ceasefire. The U.S. sees this as a breach of the memorandum of understanding that this is supposed to be free transit and you know, free passage and without any fees, at least for 60 days from the time that the that the agreement was signed. But Iran is saying that it's closed for vessels that don't have permission. The U.S. is saying that the strait is open, really, really meaning through the southern channel, but there are very few takers because Iran is attacking vessels that take that route. And so there are very few that are kind of willing to take that risk. So we've seen a big drop in the in the number of um transits. And the U.S. has re-implemented its blockade. So those are kind of the two aspects: Iranian attacks on ships and U.S. blockades for um Iranian-linked vessels, and that's back in place. So it really is kind of back to the drawing board in terms of where things were before the ceasefire, with one additional part, which is that uh President Trump went on social media and made several pronouncements. One is that the blockade was going to be back in place, which did happen. And then two others: one is that the U.S. is going to take over control of the strait and uh be the guardian of the strait. And second, that the U.S. is going to apply 20% fees on the value of cargo going back and forth. Now, again, these are pronouncements on social media. These don't have, you know, necessarily, I don't know, practical uh implications necessarily. And there was really kind of a quick backlash against the 20%, which would be, you know, many millions of dollars for tankers and, you know, I don't know, thousands of dollars if you broke the down per container. And that today has been kind of dialed back. And now he's saying that uh, you know, Gulf states are going to contribute. The other fundamental part is what does that mean? The U.S. will be the guardian of the strait. I think if the US could control the strait militarily, it would have done so already. And we see with the Strait of Hormuz and also with the with the Red Sea that it's easier said than done when all that needs to be done is kind of raise the risk to the point that vessels don't want to pass. So, in many ways, yes, we're back to where we started.

SPEAKER_00 2:50

Okay, with all that bearing in mind, what does that mean for the freight markets?

SPEAKER_01 2:53

So for local containers trying to get in and out of the Gulf, it means they're going to be relying on these alternative ports and land bridges, which, as we've said before, are not set up for the volumes they're trying to handle. So there is congestion. There's very high costs associated with these alternatives, and there are long delays. So this is going to continue longer as opposed to container flows going in and out. But as we've said, this is not the biggest impact for the broader market. It's just for that market. This probably pushes a return to the Red Sea further back. There's talk that uh Iran is going to have Putis restart attacks. We've seen some gradual steps back towards the Red Sea by some carriers like CMA and MERSC and some additional steps just in the last week when the direction was towards more stability and not less. So it's very likely those vessels or services are going to make a U-turn again. And the biggest impact is the price of oil and the price of bunker fuel. So we quickly saw uh crude prices go jump up about 10 or 11% since you know within the last week. Bunker fuel prices are up about 5%. And for each of these, it's kind of back to mid-June prices. So we've kind of gradually seen uh prices falling, uh, maybe a little bit quicker since it seemed like there was going to be more of an enduring ceasefire. And we're seeing that reverse now, but not back to the levels we saw April, May, where we saw very, very high levels, maybe double where they were before the war began. And we probably won't see prices go back there because there've been a lot of adjustments even before the ceasefire in terms of you know more oil going by pipelines, more production by alternative sources. So we probably won't see bunker fuel prices or accrue prices go way back up to where they were, but now they're facing some additional pressure.

SPEAKER_00 4:31

Okay. So does that mean container rates are going to be facing upward pressure?

SPEAKER_01 4:34

So if fuel prices are higher, that's gonna be a uh component towards spot rates or container rates. But right now it's not the story at all, right? So we saw rates, I'm sorry, we saw bunker fuel prices come down really significantly since May, but in that period we've seen container rates going way up. So the fact that we're seeing uh fuel prices go up now probably doesn't necessarily mean we're gonna see prices go, uh container prices go up because the big driver now is what's going on with peak season. As we've been saying for the last few weeks, peak season demand started early and it's been quite strong since really mid-May, but certainly since the beginning of June. We've seen GRIs and peak season surcharges stick basically bi-weekly. Every two weeks, rates go up for Trans-Pacific. Rates are $7,600 to the West Coast and more than $9,000 to the East Coast. That's $4,000 higher than they were at the end of May. About $3,000 higher than they were at the end of May for Asia Europe and Asia Mediterranean, which are at about $6,000 and $7,000 per container. Um, so that's a big driver of rates right now. Peak season demand, keeping vessels full and prices really, really high.

SPEAKER_00 5:40

Does it seem like demand is gonna keep pushing rates up, or will the early start to peak season mean we're gonna see rates cool down early as well?

SPEAKER_01 5:48

So carriers have announced and planned July 15th additional increases, GRIs or peak season surcharges for, you know, for this week. Um so it's possible that we'll see rates continue to go up. That certainly seems to be maintenance by carriers, but there are kind of signs to the contrary. So there are reports of space getting more easily available on some of these lanes. There are reports of some carriers already offering discounts to what the spot rate kind of benchmarks already are. And we also have the National Retail Federation, which um recently released its uh latest U.S. Ocean import volume report, which includes um estimations and projections. And they estimate that July is going to be a record-breaking month of 2.47 million TU that beats the pandemic era high for monthly imports, and these are arriving volumes. So that means that these um containers were booked, you know, end of May into June, into early July. Those are arriving in July. But for August, they're seeing they estimate they project that volumes are gonna drop by 10% month on month. In September, they're gonna drop another 10% month on month. So if these projections are accurate, that means that volumes are gonna drop for arrivals in August. That means that bookings now are probably starting to decrease. So if this plays out to be accurate, that means that we really are kind of already at the peak of peak season, which would make it more difficult for carriers to push rates up further in July, which might mean we start to see rates come down, even though fuel prices are going up. So it might mean that the ultimately the floor is a little bit higher, but demand is what's driving things right now. So we'll see. The only caveat is that you know there's also significant congestion. So there's been congestion because of this big surge in volume, especially in the Far East, ports are congested, and that um you know ties up capacity, that reduces supply and can therefore put upper pressure on rates, even if demand starts to come down. And just at the end or over the weekend, there was uh a typhoon in North Asia that's caused a lot of disruptions to port operations there, which could also kind of contribute to that. So even if our past peak bookings, because of this additional kind of supply side constraint, we might see rates either be able to go a little bit higher or kind of level off even though demand is starting to ease. But it'll really be the next, you know, few days or towards the end of the month that we'll see um how this plays out.

SPEAKER_00 8:14

Time will tell, as always. All right, that's all we have time for. Thank you, Judah. If you enjoyed this session, please hit the subscribe button and you'll get notified about all our future episodes. Thank you for listening and goodbye.