Shipping News Roundup – Iran War, Strait of Hormuz Shipping, & Peak Season
Halted Strikes on Iran
Today could have been a day of war escalation. President Trump posted on Truth Social that there was a military attack on Iran scheduled, but he held it off at the request of the leaders of Saudi Arabia and the UAE because of serious negotiations happening now. The president said the crown prince of Saudi Arabia and the president of the UAE believe a deal that’s acceptable to the United States and the countries in the Middle East will be made.
Obviously, any such deal would have to include Iran relinquishing any nuclear weapon ambitions it holds.
President Trump also included a warning for Iran in the post. He’s instructed his administration and the military to be ready “on a moment’s notice” to launch a full-scale assault on Iran if a deal isn’t reached.
Here’s the president’s full post:
I have been asked by the Emir of Qatar, Tamim bin Hamad Al Thani, the Crown Prince of Saudi Arabia, Mohammed bin Salman Al Saud, and the President of the United Arab Emirates, Mohamed bin Zayed Al Nahyan, to hold off on our planned Military attack of the Islamic Republic of Iran, which was scheduled for tomorrow, in that serious negotiations are now taking place, and that, in their opinion, as Great Leaders and Allies, a Deal will be made, which will be very acceptable to the United States of America, as well as all Countries in the Middle East, and beyond. This Deal will include, importantly, NO NUCLEAR WEAPONS FOR IRAN! Based on my respect for the above mentioned Leaders, I have instructed Secretary of War, Pete Hegseth, The Chairman of The Joint Chiefs of Staff, General Daniel Caine, and The United States Military, that we will NOT be doing the scheduled attack of Iran tomorrow, but have further instructed them to be prepared to go forward with a full, large scale assault of Iran, on a moment’s notice, in the event that an acceptable Deal is not reached. Thank you for your attention to this matter! President DONALD J. TRUMP
Speaking of the Iran War, there’s good news and bad news as it pertains to its fallout around shipping through the Strait of Hormuz. Let’s go bad news then good news….
Iran Creates New Authority in Attempt to Control Strait of Hormuz
This is guaranteed to be something President Trump doesn’t like that isn’t conducive to a deal between the U.S. and Iran. Iran has set up a new body to control the ship traffic through the Strait of Hormuz, as reported in an Epoch Times article by Evgenia Filimianova:
Tehran has moved to formalize its control over the Strait of Hormuz by introducing a new body to oversee maritime transit through the strategic waterway and charge tolls, as businesses worldwide face mounting losses tied to shipping disruptions and rising energy costs.
The newly created Persian Gulf Strait Authority, or PGSA, announced in a May 18 post on X that it is now the “legal entity and representative authority” responsible for managing passage through the Strait of Hormuz on behalf of the Iranian government.
Vessels navigating within the Iranian-designated boundaries of the strait must coordinate with Iranian authorities and armed forces, it said.
“Passage without permission will be considered illegal,” the PGSA said.
The Trump Administration has repeatedly condemned Iran’s actions – including putting mines in the water, attacking ships, and attempting to enforce tolls on ships, to control the Strait of Hormuz, which should be free, international waters.
No doubt, this will be addressed in any agreement between the U.S. and Iran, should such an agreement be struck in the upcoming days, avoiding new strikes from the U.S. Now for the good news…
Traffic Thru the Strait of Hormuz Increases
Despite Iran ratcheting up attempts to control the Strait of Hormuz, ship traffic through the waterway is increasing, as Evgenia Filimianova also reported in the Epoch Times, but in a different article:
At least 54 vessels passed through the Strait of Hormuz during the week ending May 18, according to Lloyd’s List Intelligence data, as U.S.–Iran talks continue and U.N. officials call for unrestricted access to the waterway.
The figure compares to 25 vessels in the week preceding May 11, Lloyd’s List Intelligence said in a May 19 post on X. The shipping analytics company said the traffic increase included 10 China-owned vessels after Iran signaled it would allow some Chinese ships to pass through the strait.
It will be worth watching to see if the U.N. backs its words that it prioritizes freedom of navigation through the Strait of Hormuz with action.
Speaking of increased shipping through international waters…
Shipping Returning to the Red Sea
More ships transited the Suez Canal last week than have been seen in ten weeks, as Stuart Chirls reports in a FreightWaves article:
More and larger container vessels marked a 10-week high for transits on the contested Suez Canal-Red Sea route, according to Drewry.
Containership transits via the Suez Canal and Red Sea reached a 10-week high for the week ending May 17, said shipping consultant Drewry.
Containerships sailing via the Suez Canal totaled 22 in the week ended May 10 May, and 32 for the week ended May 17 May, reaching a 10-week high, according to the Drewry Red Sea Diversion Tracker.
A full return to shipping through the Gulf of Aden, Red Sea, and Suez Canal would significantly increase the available capacity ocean freight carriers have to work with in global shipping.
Unfortunately for shippers, freight rate savings from this aren’t to be seen yet. Carriers are heavily utilizing blank (canceled) to control capacity and keep overcapacity from creating downward pressure on freight rates.
Before the Iran War hit, freight rates were getting uncomfortably low for carriers. That changed quickly, as is always the case, when a major world shipping hub suffers disruption. With the Persian Gulf supplying approximately 20% of the world’s exported oil, rising oil prices play a big role in the increased freight rates.
Speaking of rising freight rates…
Peak Season Here?!
FreightWaves published a surprisingly short article from Stuart Chirls that posits the question in its title, “Is peak season here?”
The article started with Chirls sharing Frieghtos analyst Judah Levine’s statement that trans-Pacific freight rates rose by about $1,000 per FEU since the beginning of the Iran War in February and would likely climb more when peak season demand hits.
There’s nothing surprising there, but then when quoting Levine’s details, there was a sentence speculating on the possibility that the peak season is already beginning:
“Prices [from Asia] were about level last week at $2,800/per FEU to the West Coast and $4,300 per FEU to the East Coast though daily [spot] rates so far are climbing on these lanes, too, from mid-month price hikes,” Levine wrote in a research update. “It is possible, though less likely, that the trans-Pacific peak season is also starting already.”
Rising freight rates, especially when there are obvious factors putting upward pressure on them does not mean the peak is here. And the end of Chirls’s article espouses that, even gives a reason to believe the peak season has not started yet, with a July start prediction:
Levine said prior-year comparisons are not valid because of tariff-driven frontloading and erratic start and stops.
The National Retail Federation forecasts a July start to peak season, “so demand could start picking up soon if it hasn’t just yet. If there is no demand bump yet, it will remain to be seen if carriers have removed enough capacity to support the current price increases until volumes pick up.”
Still, the question was enough for me to take a peek at Universal Cargo’s internal shipment and container counts. Obviously, Universal Cargo’s numbers would be merely anecdotal, as we’re only one freight forwarder and not nearly a large enough sample size to represent the shipping industry as a whole. However, I have often used the numbers as a barometer for what’s happening in the industry in the past, which is a role they’ve often performed well.
While May’s numbers aren’t quite official yet, file and container counts are both up a little bit from April’s. The number of shipments filed were up by about 2.5% while the container count was up a little over 6.5%. That’s not insignificant month-over-month growth, but peak season growth is probably typically something closer to 20 or even 30%. In a super strong peak season, it wouldn’t be completely out of the question for cargo volume to increase by 50% or even double.
Universal Cargo actually saw more file and cargo growth from March to April than we saw from April to May. It would be hard to think from our numbers that the peak season has already arrived, unless it was just having a very soft and early start.
