Container Freight Rates Fall for Second Consecutive Week Despite Hormuz Crisis as Supply-Demand Dynamics Override Geopolitical Risk

Global container freight rates have declined for two consecutive weeks despite the ongoing geopolitical crisis in the Middle East, reflecting a market dynamic in which actual supply and demand factors — a slowdown in early shipment demand from the United States and an expansion of vessel supply — are being priced in more strongly than geopolitical risk premiums. According to shipping industry data published on 22 July 2026, the Shanghai Containerised Freight Index (SCFI) as of 17 July recorded 3,080.31, dropping 104.52 points compared to the previous week. The index had been on an upward trend for 10 consecutive weeks before entering this downward phase.

This is a contrasting trend to previous geopolitical episodes, when freight rates tended to spike immediately whenever Middle East conflicts or Suez Canal disruptions occurred. The background to the SCFI decline, despite ongoing Strait of Hormuz tensions, lies in the structural logic of supply expansion outweighing demand softening in the short term. A key factor is that the Strait of Hormuz primarily carries crude oil and liquefied natural gas — not containers — meaning the direct impact on container freight rates is more limited compared to the tanker and LNG carrier segments, which had reacted earlier to the crisis.

The broader container market is also absorbing the fuel cost increases from the crisis rather than passing them directly to rates, as persistent overcapacity — with the global container orderbook approaching 40% of the existing fleet — continues to act as a counterweight to rate increases. Net fleet growth averaged 9.7% and 8.6% in 2024 and 2025, and is projected at 10.2% over 2026 to 2029, materially outpacing demand. Market attention is now shifting to the Red Sea, where the Houthi movement's recent warnings targeting Saudi-linked shipping represent a potential second chokepoint disruption that, if enforced, could affect container trades more directly than the Hormuz closure has to date.