Latest / The Loadstar / News in Brief Podcast | Week 12 2026 |Capacity squeeze, Rate rise & Network shifts

Transcript

News in Brief Podcast | Week 12 2026 |Capacity squeeze, Rate rise & Network shifts · The Loadstar

• 0:00
  Speaker A: Hello and welcome to the Lodestar podcast news. In brief, we are going to be rounding up all the main points of last week's supply chain news. Coming up in this episode, as to be expected, will be a situation update of the escalation in conflict in the Middle east, plus what impact this is having on rates in both air and sea. We will also be taking a look at what the balance is between supply and demand and how ocean carriers are organizing their networks. And my first guest for this episode, I'm thrilled to say that I am joined by Freitas head of research, Judah Levine. Hello, Judah. Thank you for joining me on the podcast today.
• 0:43
  Speaker B: Hi, thank you.
• 0:44
  Speaker A: Thanks for having me, Judah. As was the case with last week's episode, most of the attention in this week's news cycle was turned to the conflicts in the Middle East. What is the current situational update? When we record now, which was the afternoon of Thursday, the 19th of of March, are things getting better? Are they escalating? How are things as you see them?
• 1:06
  Speaker B: So they're definitely escalating to some extent. But in terms of the closure of the Strait of Hormuz, which is the biggest impact in terms of ocean, it continues. So it's escalating in the sense that attacks have continued. Something like more than 20 vessels have been attacked and it's escalated in the sense that it's not just vessels that are trying to transit the Strait of Hormuz, which it seemed to be initially, but it's also vessels just, you know, even anchored in the Persian Gulf or in the Gulf of Oman. So in that sense it has, it has spread. If we talk about specifically the container market, you know, operationally and really from the beginning, it's really only impacting those Gulf bound or containers trying to get out of the Persian Gulf. And that's only about 2 to 3% of, of global volume. So it's relatively contained and even there in a certain way, things are getting better. So things are not getting in and out of the Persian Gulf. But at first carriers had suspended new bookings, so they were trying to figure out what to do with containers are already en route and they weren't accepting new containers. And now they kind of have figured it out and they are accepting new bookings. So carriers like cma, CGM and Maersk just announced this week they're accepting new bookings and that's because they've developed alternate routes. So there's a lot of containers going from the Far east first to India and then to alternate ports or accessible Ports in the region, so accessible ports from the UAE kind of just on the other side or the eastern side of the strait, ports in Oman. So there are a lot of containers taking that route. And also through Jeddah, in the port in Saudi Arabia, which is in the northern Red Sea, that's being become a big kind of hub that a lot of containers are going, you know, the long way around, not going through the Red Sea like we've known for the last couple of years, and, and entering Saudi Arabia through there and then it's on by rail or, or road. So there are new routes available, bookings are being accepted. But you know, these are alternatives that aren't built for kind of the big volume. So Jebel Ali, the major port in, in Dubai is, you know, the 9th or 10th largest port in the world. And these are much smaller ports not built for. And the road transport in the rail is not built for that either. So these are much more expensive and longer routes, but they are moving. If we look at our freight house terminal, we have rates from Shanghai to Jebel ali, they're about $2,000 before the war, now they're at $6,300. And there are trucking shortages, there are trucking surcharges, each of those things along the way. But containers are moving. So in that sense we're seeing an improvement. If we talk about air cargo though, it's a much different story because we're seeing a much broader impact because of these aerospace closures and because of these, you know, drop in capacity from these big, from the carriers in the Gulf. Because Qatar and Emirates are two of the largest air cargo carriers in the world by capacity. Together they make up about 11% of global capacity. And throw in Etihad, that's about 13% of capacity. They serve as a major hub for east west traffic. So a lot of volumes going from Asia, especially South Asia and Southeast Asia to Europe normally goes through those hubs also from Africa to Europe. So the loss of that capacity means that a lot of those volumes have to be rerouted. So you've seen a big drop in capacity out of, in and out of the Middle east, of course, and those volumes have to move elsewhere. So they're going further east first and they're going direct from the Far east or other parts of, of Asia to Europe. So we're hearing increases of capacity on those lanes from other carriers, from European carriers, from carriers from the Far East. So there's been a big shuffle because of that. There was a fear of backlogs in Some of these alternative hubs down in the Far east, and I haven't really heard about big problems with congestion or things like that. So things are shifting, but certainly the networks are having to adapt. I think, as we said, Emirates has started recovering, so the UAE is really pushing to keep the airspace open. Emirates is recovering a lot of its schedule and certainly probably not all of it, but it's steadily improving from what I understand. And as we said, other carriers are adding capacity, but in Qatar, the airspace remains closed. So for Qatar Airways, all their services in and out of Doha are still, all those operations are still suspended and they're about, they're the largest carriers. So they're about 6% of global capacity. So that's still certainly a deficit for the overall market.
• 5:36
  Speaker A: Well, I mean, with all of this in mind, is this showing up in the rates? I think it would be better to start with the air freight rates because I think usually with these things, it shows up quicker and a lot more severely in the air freight sector. And as you mentioned, these Gulf carriers make up such a large part of the overall air cargo network. So. So have rates risen quite substantially this week? What are you seeing on the freightos terminal?
• 5:59
  Speaker B: Yeah, so if we talk from the outbreak of the war, which was the very end of February, with that drop of available capacity and with all this shuffling around, we have definitely seen air rates increase. So our freightos air index shows that lanes like South Asia to Europe, those prices as of today are up to $4.60 per kilo. And that's an 80% increase compared to what it was just before the war. Southeast Asia to Europe is up 40% to almost $4.70. And then into Middle East Europe to the Middle east, prices are up almost 60% to $2.80. And now some of these increases are probably from fuel surcharges. And if fuel surcharges increase, we'll see rates go up not only on these lanes, but, but across the board. But so far we're seeing impacts on other lanes as well. China to Europe is up 17%. So we know there's been a lot of capacity added there. But even so, we're seeing rates increase and other lanes as well. China to the US up 20% to about $7 per kilo, which is quite expensive. Some of this has kind of overlapped with post lunar New Year demand, so we might see a little bit of easing in terms of the demand side. But if capacity is being added on one lane, it's being taken from another lane. So it's possible we see increases there. Now that being said, we've had these very sharp increases, but over the last few days, kind of the rate of increase has slowed. So if you compare it to before the war, rates are very high. But in the last few days, really maybe the, this past week, rates have kind of leveled off or even dipped a little bit on some of these lanes. So that might reflect some of these capacity additions by other carriers, as we mentioned, and some of that recovery by Emirates. But as we said, Qatar is still, is still missing. And if there are kind of operationally, I think we're probably past the worst of it. And that would say rates kind of level off. But if fuel prices increase, we'll see where rates increase probably across the board.
• 7:47
  Speaker A: Yeah, I mean those are some huge increases, but I guess good to see that it's slightly leveling off now. And comparatively, what are ocean freight rates looking like? Because we mentioned it earlier on in this episode and we spoke about it quite extensively in last episode that fuel prices are rising massively. But actually we had a report last week from Lars Jensen did one and also see intelligence did one that said that if oil prices double now and then stay at that level for a year, we would roughly be at the freight level that maersk was in 2024. So actually it's not that catastrophic of an increase. What are you seeing on the freighthouse terminal in terms of ocean rates?
• 8:28
  Speaker B: Yeah, well, first of all, freight rates in 2024 were quite elevated, right? They weren't at Covid levels, but they were quite elevated, I think up to maybe $6,000 per container, you know, on the, on the far far east to West Lane. So I don't think anyone wants to go back to those kind of freight rates on the, on the shipper side at least. But yeah, as we said for the impacted regions, very high freight rates already, you know, up to $6,000 to get a container to Jebel Ali, which means that you're going maybe through India and then through Oman or through Saudi Arabia and then by road on the other lanes. So far we haven't seen rate increases, but it seems like they're coming. So first of all, as we said, the price of oil is increasing. The price of fuel for the carriers, which is a major component of their cost, is increasing. And the major carriers are announcing emergency fuel surcharges, but they've announced, they have to announce them a little bit in advance. So they're going into effect in the next few days. So around starting the 21st or 23rd March. So for example, and they've announced surcharges and have updated them since then even though they haven't gone into effect yet. So kind of increase them since then. So for example CMA CGM just announced a surcharge of $265 per TEU for long haul containers. And that's up from $150 in their initial announcement which is a few days prior. And this goes into effect March 27. For example OCL Asia Europe is $320 per 40 foot on the Trans Pacific, $470 to the east coast, $230 FAU to the west coast. Maersk $400 fu. And these are, you know, global. These are on specific trade lines, although there are surcharges for specific trade lines as well. So carriers are kind of spreading those increased costs across all containers. But besides just the fuel surcharges, we're also seeing really a flurry of other surcharges. Peak season surcharges gris being being announced across multiple lanes beyond just those Gulf lanes. So Asia Europe, transatlantic. So far I haven't seen on Trans Pacific. But for example these could be quite expensive. So CMA announced in Asia Mediterranean FAA to $6,300 per FAU. That would be the, the rate level same with MSC. And just for, for reference to the Mediterranean, right now rates are about $4,000. That'd be about a $2,000 increase. Similar types of increases for to North Europe CMA had a transatlantic one of $1,000 as a peak season surcharge. So a lot of surcharges coming right now rates haven't changed that much. So our daily rates from our freighters Baltic index is about $2,200 on the trans Pacific to the west coast and it was about $1,900 just before the war to the east coast unchanged. For Asia Europe rates have gone up about 5,$600 per container, which is not insignificant. But again, we're just past a lunar New Year as well. So that's probably kind of seasonal or expected, but certainly those fuel surcharges are coming. We're going to see rates go up by several hundred dollars per container probably across the board. The question is whether these additional surcharges are going to take. We've already heard some kind of reports of pushback from, from big bcos that are, you know, are not directly impacted by these lanes, that they don't want to accept surcharges related to those disruptions and that's a fair case to be made. You know, fuel prices go up, your fuel surcharge will, will go up, but not, but not beyond that. On the other hand, we hear reports from mers that it's not just the price of oil that is increasing their cost, but also the availability of oil. So that's being disrupted. So if they are normally bunkering in Salalah in Oman and all of a sudden it's not accessible, they have to shift to, to fuel somewhere else. They're even reporting that they're moving excess fuel on their own ships and then transferring between vessels, which is extreme and that's an additional cost. So I think if the case can be made that there really are these additional costs on the carrier side, we'll see kind of acceptance of rates, but who knows? I think for sure we'll see those fuel surcharges take, but whether we'll see those other surcharges take in full remains to be seen.
• 12:37
  Speaker A: That would be a really interesting thing to watch out for. I mean we monitor the ocean carriers advisory pages every day and usually you get one or two updates a week, but like, I mean the recent weeks it's literally been about five updates a day, which, I mean it's great for us as journalists. Gives us lots to write about, but yeah, lots and lots for shippers to keep on top of. Thank you so much for summarizing that all for us. Judah, that's really, really useful and I really appreciate your time.
• 13:02
  Speaker B: My pleasure. Thanks for having me.
• 13:04
  Speaker A: And my next guest for the podcast. After having a week off from recording with me, I am joined by the Lodestar managing editor, Gavin Van Maal. Hello Gavin.
• 13:14
  Speaker C: Hello Charlotte. How are you?
• 13:15
  Speaker A: I'm very well, thank you. Thank you very much for joining me today. I've just been speaking to Jude Delevingne from Freighthouse about the conflicts in the Middle east and the impact this is having on supply chains. Obviously carriers have had to reroute a lot of their schedules. Is there any particular pattern that you've noticed?
• 13:33
  Speaker C: Well, I mean on those trades that formerly used to include calls at gulfports such as Asia, Europe, Strings, you know, those ships are obviously avoiding the region. So the transshipment traffic that would have been handled in Dubai or Abu Dhabi is now being done elsewhere. I mean think of Salalah. There's Colombo and of course there's the Southeast Asian hubs. We'll come back to Salalah in a second for Gulf bound cargo. It's a completely different scenario, Charlotte. I mean, and one as the war drags on, is going to make life very difficult for the people there. I mean, the GCC countries, so from Kuwait down to Oman and including Saudi Arabia and the UAE, Qatar and Bahrain, combined population of nearly 62 million people. I mean, that's a lot, right? That's the same size as the population of the uk, and the vast majority of those are completely dependent on imports brought on container ships for the basic everyday needs food, medicine, clothing, FMCs, goods. And so with Homer's shut, how on earth do you continue these, maintain these critical supply chains? So basically you've got three they call bypass routes, by the way, in debt. I'm just going to quick shout out to Eric Hooper at Drury for a fantastic piece of research on this. So you've got basically three bypass routes. You've got the UAE and Omani ports outside Hummus. Number two, there's Saudi Arabia's Red Sea ports and number three, you can use Turkey. None of these are without challenges. So number one, you've got the UAE and Omani ports, you've got Corfican and Fujairah and so are all have good road connections to the uae, but we've seen clearly within recent weeks that they're all within Iran's shooting range. So, not put it too flippantly. And Salalah, although it is in Oman, is actually right at the other end of the country, near the Yemeni border. It's simply too far away to be able to supply the UAE population centers with goods. So it's like 1700 kilometers across empty quarter, although, as we said there would be some of the transshipment traffic that was typically handled inside the Gulf can now be done at Salalah. But even Salalah's had to shut occasionally from missile attacks. Number two, you've got the Red Sea ports and clearly that's actually, I think, what is going to be the main route into the Gulf for these containers. So you've got principally Jeddah and King Abdullaport and then there's also the nascent, what is being called the Neon port. And the Saudis have officially opened a Jeddah logistics corridor. So, I mean, they're actively promoting these ports, which can be accessed obviously via the Suez Canal if you're coming southbound out of the Mediterranean. So that's probably going to be the number one way of doing it. But the distances are still very, very far. I mean, you've got to get all the way across Saudi to get to those population centers in the Persian Gulf. And number three, the There has been particularly MSC and cma. CGM have been touting the Turkish port of Mersin and a road solution from there. But that really only works for Iraq. The distances beyond Iraq are again, sort of too great. I mean, really, what sort of. What concerns me most about this situation, Charlotte, is that is the food supplies. The very interesting analysis from Transport Intelligence last week which reported that most of these countries in the Persian Gulf have strategic reserves of wheat and rice of between four to six months. But fresh food is going to require huge amount of reefer trucking across the Saudi land bridge. And, you know, it takes time to actually just perform the trucks, you know, to the trucking, for the trucking leg to work, but and also to do all these various reroutings. So I wouldn't be surprised if we start hearing reports of shortages of fresh fruit and veg emerging soon from the region.
• 18:03
  Speaker A: That really is very scary. Thank you for kind of summarizing that. I mean, presumably with all of these network changes from the carrier, it's kind of distorting the supply, demand, balance because there's so much capacity being used up to reroute to different places. I was reading a report from Braemar about the charter market and they were saying that there's a lot of forward fixing going on. That's basically the new norm. And the charter market still hasn't slowed down. Carriers are still very much on the hunt for tonnage. But I mean, what are you seeing at the moment in terms of kind of supply and demand?
• 18:37
  Speaker C: So on a, sort of. On a. Not just. We're talking wider here. Yeah. Not just in the Gulf region. Yeah. So I mean, if you, I mean, if you were a carrier customer in Europe or North America, to be honest, everything still seems pretty okay. I mean, no one I've spoken to in the recent days has any problems finding space on vessels. We saw, again, we saw this week, the spot rates are very flat, which suggests that supply and demand are sort of in step really. You know, you get a rate war when there's far too much supply and not enough demand, and you get rapidly rising rates when, when, when there's a lot of demand and not enough supply and, and, and when it's just flat, it's all in. In step. I mean, obviously the war has removed some capacity. You know, there are ships that are stuck in the Gulf. But the latest estimate I heard on that was it was about 1% of the global fleet. But to go back to what you're saying from Braemar. Yeah. I mean it has made life difficult for the carriers, especially those that were planning to resume Red Sea transits. Right. Because they were doing that for, you know, a way of releasing capacity throughout their networks. Lynelitica this week reported that Maersk in particular is short of ships and said that the Danish carrier would keep the charter market busy in the coming weeks. Close quotes. So we should expect continuing high charter rates which are ultimately going to hit carriers first quarter bottom lines on a even broader, broader level if you like. There have been indications if you study carriers forward schedules and you do, Don't tell anyone, they'll think I'm not a nerd. But if you do, you'll see that there are plans to increase capacity in the Trans Pacific and the Asia Europe trades in the coming weeks because people at this time of year you typically hope for a sort of post Chinese New Year cargo bounce back. And that capacity increase is particularly noticeable on the Ocean alliance which has some fairly hefty slot additions coming lined up for the coming weeks. And so here's the thing, if that cargo bounce back doesn't happen, difficult to see it happening at the moment because the war just injects so much uncertainty into, you know, shippers plans and stuff. So if that bounce back doesn't happen, then they put on loads of capacity and then they have to withdraw it through blank sailing. So there could be quite a lot of volatility in terms of schedules when ships are sailing when they're not in the coming weeks as a sort of indirect result of what's going on in the Middle East. Right.
• 21:42
  Speaker A: So expect even more volatility. That is brilliant news.
• 21:46
  Speaker C: Yeah, it's the safe, the safe prediction.
• 21:51
  Speaker A: Very true. Finally, Gav, Alex is not here this week so I'm going to be asking you what has been on premium.
• 21:59
  Speaker C: Yeah, we had an analysis of STG, which has entered Chapter 11 in the United States under $1.2 billion debt. Big restructuring going on there. I wrote an article on the, the widening spread between indices, rates and actual rates. And we've got exclusive moves, C suite moves on at Siva and Scan Global. And then there's a long analysis of the Union Pacific Norfolk Southern merger.
• 22:30
  Speaker A: Oh, lots of, lots of good stuff to get stuck into over on Lodestar Premium. Thank you so much, Gav for joining me today.
• 22:37
  Speaker C: You're very welcome. Thank you for having me, Charlotte.
• 22:40
  Speaker A: So there we have it. That is it for this week's episode of News in Brief. A huge thank you to Judah Levine for joining me on the podcast today and of course Gavin Van Marle if you would like to be featured on the Lodestar News in Brief to chat with me about the week's supply chain news, then please do get in touch@charlotteheldstar.com unfortunately there will be no News in Brief next week as I am off on holiday, but we will be back with you in two weeks time for another instalment. Please subscribe to our YouTube channel so you never miss an update. Thank you very much for listening or watching and I will see you next time.