Although the Strait of Hormuz is showing signs of relief in the wake of the framework agreement between the U.S. and Iran to end the war, ocean spot freight rates are soaring to averages not seen in nearly two years, with composite container prices across all trade lanes surpassing the $4,000 mark.

The Drewry World Container Index (WCI) increased 5 percent week over week to $4,166 per 40-foot container, supported most heavily by an increase in rates on the trans-Pacific trade route as shippers rush to transport goods into the U.S. ahead of bunker fuel adjustments on July 1 and potential tariff changes.

The early peak shipping season also coincides with lower retail inventories across the board. U.S. retail’s inventories-to-sales ratio fell to 1.26 in April, the lowest since February 2023, according to the U.S. Census Bureau. Wholesalers are treading a finer line, with their inventories-to-sales ratio coming in at 1.19, a number unseen since December 2013.

According to data revealed Thursday, the Shanghai-to-Los Angeles corridor was the biggest culprit of the upward move. Cargo prices on that trade lane increased 12 percent to $5,750 per container. Containers traveling from Shanghai-to-New York also rose 6 percent to $7,149, the highest average freight rate of the eight routes monitored by Drewry.

Spot rates have been soaring consistently since the start of the war in Iran in late February, which sent traffic the Strait of Hormuz to a near-standstill in the following months, rattling energy markets. Since Feb. 26, when average container prices were $1,899, the WCI has more than doubled at a rate of 119 percent.

Even as oil prices have leveled out closer to pre-war levels in recent weeks, the continued trans-Pacific traffic boost has logged a 22-month high for the composite index. On Thursday, the WCI reached its highest level since Sept. 12, 2024, when it averaged out to $4,168 per 40-foot container. At the time, rates had been plummeting from their annual peak of nearly $6,000 that July, when mass diversions away from the Red Sea resulted in elevated congestion at some of the busiest gateways worldwide including the Ports of Singapore, Shanghai and Ningbo.

For the weeks ahead, Drewry expects spot rates to continue ascending as ocean carriers expect to implement more variations of peak season surcharges and general rate increases during July.

Hormuz traffic escalates to post-war highs

While shippers grapple with higher prices, ocean carriers directly impacted by the disruptions in the Middle East are reacting more favorably to the recent memorandum of understanding between the U.S. and Iran.

Confirmed strait crossings more than doubled on Wednesday from the day prior, with 70 verified transits, according to ship tracking intelligence firm MarineTraffic. This is the most such crossings since the start of the conflict, albeit still well below the 130 to 160 sailings that typically are completed.

“This marks a clear step-up in activity, but several days of follow-through are needed before treating the move as a new baseline rather than a post-deal release of delayed traffic,” said Ana Subasic, trade risk analyst at MarineTraffic, in a Thursday morning update.

However, there is plenty of uncertainty surrounding adherence to the MoU, with the Wall Street Journal reporting Thursday that Iran expects to reel in $40 billion per year as part of a mechanism to impose tolls. The report said Iran wants its Persian Gulf neighbors to be part of the agreement and share the revenue.

Both the U.S. and Oman, the other country involved in coordinating transits through the strait, have insisted that the passage remain toll-free. United Nations law deems it illegal for a bordering individual nation to impose tolls on international waters.

Subasic pointed out that vessels passing through the strait increasingly used the UN-promoted route close to Oman’s coast despite continued warnings from Iran’s Islamic Revolutionary Guard Corps. The Omani-identified route saw the highest use, with 27 crossings.

The UN’s International Maritime Organization (IMO) implemented an evacuation plan following the signing of the MoU to help stranded vessels in the Persian Gulf safely pass through the waterway.

According to freight benchmarking platform Xeneta, seven of Wednesday’s transits were container ships.

“Only one was inbound to the Persian Gulf, meaning the industry is still on a mission to bring trapped seafarers out of the region, rather than re-establishing networks,” said Peter Sand, chief analyst at Xeneta, in a Thursday morning update. “Reconnecting container services requires a fundamentally different risk assessment than one-off transits by other vessel types. Carriers need a safe, permanent corridor before they will commit networks and we are not there yet.”