Freightos Weekly Update: Congestion playing a bigger role in container rates

The US-Iran Memorandum of Understanding – signed sixty days ago and aimed at reopening the Strait of Hormuz and kickstarting negotiations to end the war – expired yesterday. As Iranian attacks continue and the US blockade remains in place, a reopening is seemingly no closer than before the agreement. Despite the ongoing war and increased tensions and renewed attacks in the Red Sea, Maersk – along with Hapag-Lloyd, CMA CGM and COSCO – is determined to continue taking steps back toward resuming Red Sea transits. While earlier threats and attacks in the waterway had led to carrier u-turns, changed container market conditions may be behind this new carrier resolve to return even as security concerns remain. Linerlytica recently pointed out that even with significant insurance premiums to cross the Bab el Mandeb, higher fuel costs from the Hormuz closure are making diversions around the Cape of Good Hope much more expensive than they’d been from late 2023 when diversions began until the start of the war.