Market Conditions – Blank sailings from the second half of May through the first half of June created a significant capacity shortage across the transpacific trade, triggering multiple freight rate increases not seen since July 2024. Those blank sailings have largely disappeared, with the exception of India–Pakistan services, where capacity remains constrained due to MSC's service suspension and additional blank sailings on the Indamex and WIN services in early July. While we expect rollovers and space constraints to continue easing throughout July, these improvements are unlikely to translate into meaningful downward pressure on freight rates in the near term.
Market Rates – A combination of stronger-than-expected import volumes from big box shippers, elevated fuel costs, draft restrictions at the Panama Canal, and disciplined capacity management by ocean carriers during the traditional peak season has caught the market off guard, driving transpacific freight rates sharply higher. Just three months ago, many shippers were negotiating long-term contract rates below 2025 levels, making the current market reversal particularly unexpected. While carriers continue to announce additional rate increases, it remains uncertain whether the market has reached its peak for 2026. Our view is that headwinds will begin to build as we move into August, making sustained rate increases more difficult to achieve. As a result, future General Rate Increase (GRI) announcements are likely to serve as efforts to defend current pricing levels rather than push rates materially higher, particularly on services to the U.S. West Coast.
Expedited Ocean Service Requests Spike – Driven by booming intra-Asia trade, blank sailings, and slower production at several Southeast Asian sourcing origins, demand for expedited ocean services increased sharply in June and is expected to remain elevated throughout the peak shipping season. Capacity for premium services offering reliable transit times, guaranteed equipment availability, and no-roll protection remains limited, particularly from non-direct origins to U.S. West Coast such as the Philippines, Malaysia, and Thailand.
India Capacity Crunch – The India–Pakistan market has largely avoided the sharp freight rate increases experienced on routes from China and Southeast Asia to the U.S. and Canada. However, since mid-June, market conditions have shifted rapidly as capacity tightened following MSC's suspension of its Indus service, which deployed eleven vessels ranging from 4,200 to 7,800 TEUs. The reduction of capacity, combined with additional blank sailings, has pushed many new bookings to sailings departing in the third week of July, driving freight rates for earlier July departures well above average FAK levels. In response to the surge in demand, MSC has announced plans to reinstate the Indus service, although a restart date has not been confirmed as of July 2. Given that MSC already operates two other India-to-U.S. East Coast services, we do not expect a rush return of the service.
Intermodal Congestion Remains Manageable – Despite the early start to the peak shipping season, intermodal dwell times at Southern California ports remained stable throughout June. Average dwell times at most terminals in Los Angeles and Long Beach were approximately 4.5 days, while Canadian intermodal shipments destined for the U.S. continued to experience elevated dwell times averaging around seven days from vessel discharge. Historically, dwell times begin to increase in July and August as railcar imbalances slow equipment returns to the U.S. West Coast. With vessel utilization remaining high and terminal yard occupancy expected to increase, we anticipate intermodal dwell times will trend upward across most West Coast ports as the peak season progresses.
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