Are Surging Freight Rates About to Come Down?

Trans-Pacific freight rates have been surging after strong shipper demand spurred an early start to international shipping’s peak season. Last week, ocean freight carriers implemented another round of freight rate increases. However, there are industry analysts who think we’ve hit 2026’s peak for freight rates, and prices for shippers will now start falling with an increase of capacity in the market.

Bill Mongelluzzo reported late last week in the Journal of Commerce (JOC):

Rate hikes implemented this week by ocean carriers on the eastbound trans-Pacific may be the last chance for liners to keep prices at their current 2026 highs — at least for US West Coast business — as the launch of new weekly services and the addition of some extra-loaders begin to inject fresh capacity into the trade lane.

Some market observers say spot rates to the West Coast could even start to soften this week after a four-month bull run driven by cargo frontloading and higher bunker fuel prices linked to the war in the Middle East.

Indeed, data shows a capacity boost is coming on the eastbound trans-Pacific. Xeneta’s eeSea indicates that July’s actual capacity from Asia to the US will rise 7.5% from June, with another 6.5% bump in planned capacity expected in August. For the West Coast alone, capacity is due to climb 12% in July month over month.

Oil Pressure Eased Too

Additionally, elevated oil prices from the Iran War are no longer holding to add their upward pressure to freight rates.

Despite a little bump in oil prices today, at the time of this writing, per barrel crude prices are pretty close to pre-war rates with Brent Crude reporting at $73.75 and West Texas Intermediate (WTI) trading at $70.13 per barrel. At its peak, oil hit around $120 per barrel.

Demand’s the Thing

The real question about freight rates is going to come down to demand. International shipping analysts seemed caught by surprise by the demand surge that happened over the last month plus.

In fact, in a June 2nd JOC article about an early peak season and surging freight rates, Mongelluzzo quoted Patrick Fay, CEO of trans-Pacific forwarder BOC International, as saying, “No one predicted this surge, and most forecasts were conservative this year.”

Much of the early demand surge seemed to be frontloading to beat potential tariff hikes around the time of President Trump’s temporary Section 122 tariffs expiring on July 24th. That could mean demand will soften here in July, August, and September when peak season is usually in full swing.

If demand does fall, carriers will certainly try to control capacity through blank (cancelled) sailings. But they’ll be fighting the injection of capacity covered above.

As I’ve previously postulated in Universal Cargo’s blog, refunds from the overturned IEEPA-authorized tariffs could also be playing into the shipping surge. Refund payouts are still a little under halfway complete. If they keep paying out through the peak season, it’s possible they could bolster demand some over the upcoming months.

Freight Rates at Peak, East Coast May Last a Little Longer – Analysts

Still, many analysts, and it appears carriers as well, believe freight rates are now at their peak with quotes like this appearing in Mongelluzzo’s reporting:

“Personally, I think the market has reached a peak,” a carrier executive told the Journal of Commerce.

Interestingly, freight rates on imports through the U.S. East Coast may hold their height longer than the trans-Pacific ones, according to Mongelluzzo’s article:

Forwarders say East Coast spot rates should remain elevated well into July because carriers are not adding capacity to that lane.

“The East Coast is tight, so those rates should stick,” Jon Monroe, who serves as an adviser to forwarders, told the Journal of Commerce.

Still, analysts don’t seem to think even those will be able to hold beyond two or three weeks:

Rachel Shames, vice president of pricing and procurement at the forwarder CV International, said vessel space is tight right now to the East Coast and to Houston, which is keeping rates elevated. But that may not last much longer.