Current Market Conditions Across Global Freight

Global shipping and air freight markets continue to experience disruption linked to geopolitical instability, security concerns, rerouting activity, and carrier capacity pressures across several major trade corridors.

Conditions remain highly dynamic and operational decisions continue to change based on carrier, insurer, and regional security assessments.

1: Red Sea, Suez Canal, Bab el-Mandeb

Current operating environment
Major container carriers continue to operate a materially reduced level of transits through the Red Sea and Suez Canal corridor for Asia–Europe services. The dominant routing pattern remains via the Cape of Good Hope, reflecting ongoing risk-based decision-making rather than physical canal constraints.

Key developments

Asia–Europe services now operate a mixed routing pattern, with Cape of Good Hope still widely used alongside selective Suez transits depending on carrier risk appetite.

• • Selective and case-by-case transits through Suez have occurred but remain limited in scope
  • Network planning has adjusted to longer voyage assumptions rather than short-term disruption management

• Some carriers have reduced service frequency or redeployed capacity to reflect extended round voyage times

Current assessment

• Operational decisions remain driven primarily by security risk assessments
• The Cape of Good Hope has become the baseline routing assumption for many schedules

2: Strait of Hormuz

Current operating environment
The Strait of Hormuz remains a high-risk operating environment, with commercial transit patterns heavily influenced by security conditions, naval activity, insurance availability, and ongoing geopolitical negotiations.

Key developments

• Commercial transit activity has remained inconsistent amid ongoing regional tensions
• War risk premiums and insurance scrutiny remain elevated
• Naval escort activity and security coordination measures have increased across the region
• Shipowners and carriers continue to apply heightened operational caution

Current assessment

• The Strait remains strategically critical, but commercial confidence and transit consistency remain heavily impacted by regional instability
• Security risk continues to influence routing, insurance, and transit decisions
• Disruption remains driven primarily by geopolitical uncertainty and precautionary operating practices rather than physical infrastructure limitations

3: Cape of Good Hope routing impact

The Cape of Good Hope route remains the primary alternative for Asia–Europe container services affected by Red Sea risk avoidance.

Key implications

• Voyage durations extended by approximately 10–15 days depending on rotation and port calls
• Increased fuel consumption and higher bunker exposure
• Schedule reliability reduced due to longer cycle times
• Increasingly embedded into medium-term carrier network planning rather than treated solely as short-term contingency routing

Current assessment
For many carriers, Cape routing is no longer being treated as a temporary workaround. It has become part of normal operational planning

4: Freight rates and contracting environment

Market structure

Pricing remains above pre-disruption baselines on affected lanes, with volatility still driven by security risk, insurance, capacity absorption and carrier routing decisions.

Carrier behaviour

Major carriers, including Maersk, MSC, CMA CGM, and Hapag-Lloyd, continue to apply:

• War risk surcharges on exposed routes
• Conflict-related operational surcharges
• Selective booking acceptance on higher-risk corridors
• Capacity management aligned with extended voyage cycles

Current assessment

• Pricing remains structurally elevated
• Short-term volatility persists but is more controlled than peak disruption phases
• Carrier leverage remains relatively strong due to ongoing effective capacity absorption linked to extended voyage cycles

5: Cost structure pressures

Insurance
War risk insurance premiums remain elevated across Middle East and Red Sea-linked exposures. Underwriting conditions remain selective, with enhanced exclusions or restrictions in certain high-risk corridors.

Fuel and bunker exposure
Bunker Adjustment Factors remain sensitive to crude oil volatility
Extended routing via southern Africa continues to structurally increase fuel consumption per voyage

Surcharges
Commonly applied charges include:

• War risk surcharges
• Emergency operational surcharges
• Port congestion-related fees
• Route deviation and disruption-related adjustments

Current assessment
Cost inflation is increasingly embedded within carrier pricing structures, although some elements remain visible as separate surcharges.

6: Supply chain efficiency and equipment flows

Port and network congestion
European hub ports continue to experience periodic congestion due to vessel bunching
Asian export hubs face intermittent pressure linked to slower vessel rotation cycles

Container equipment imbalance

• Empty container repositioning remains inefficient across major trade lanes
• Asia continues to experience episodic equipment tightness due to delayed return cycles

Capacity impact
Despite no significant vessel loss, effective global capacity remains constrained due to:

• Longer voyage durations
• Reduced vessel rotation speed
• Slower container turnaround cycles

Current assessment
The global network continues to operate with reduced efficiency, driven by longer voyage cycles, slower equipment returns and periodic congestion rather than port congestion alone.

7: Air freight and aviation conditions

Airspace environment
Middle East airspace continues to operate with heightened caution during periods of regional tension, with routing adjustments applied dynamically based on security assessments.
Some carriers and forwarders are also experiencing reduced schedule flexibility due to airspace restrictions and operational rerouting across Middle East corridors.

Operational impact

• Selective rerouting on Europe–Asia and Europe–Australia corridors
• Increased fuel burn on extended flight paths
• Pressure on crew duty cycles in certain long-haul operations

Cargo market impact

• Air freight remains operational across global networks, but capacity and routing stability remain exposed to regional airspace restrictions and schedule adjustments
• Pricing remains elevated on routes affected by rerouting or capacity pressure
• Modal shift into airfreight continues during periods of maritime disruption

Current assessment
Air cargo remains resilient and operational, but routing, fuel burn, capacity availability and pricing continue to be affected by wider geopolitical conditions, particularly where services rely on Middle East airspace or hub connectivity

Common questions we are currently being asked

Why are ships avoiding the Red Sea?
Many carriers continue to avoid the region due to ongoing security concerns, insurance pressures, and operational risk assessments linked to regional instability.

How much longer does Cape routing take?
Cape of Good Hope routings can add approximately 10–15 days to Asia–Europe transit times depending on schedules, congestion, and weather conditions.

Are air freight costs increasing?
Air freight pricing remains volatile across some trade lanes due to rerouting activity, capacity pressure, and wider disruption across global supply chains.

What does this mean for UK importers?
Many businesses are experiencing longer lead times, fluctuating costs, and reduced schedule flexibility, increasing the importance of planning, communication, and supply chain visibility.

Is the Suez Canal still open?
Yes, the Suez Canal remains operational. However, many shipping lines continue making routing decisions based on security conditions, insurance assessments, vessel schedules, and regional risk exposure. Some carriers are selectively using the route, while others continue routing around the Cape of Good Hope.

Will freight rates return to normal soon?
Freight markets remain highly sensitive to geopolitical developments, vessel availability, congestion, fuel pricing, and carrier capacity management. While some pricing volatility may ease over time, many importers and exporters are continuing to plan around elevated transport costs and longer lead times across key global trade lanes.