Supply Chain Action Points
Read this first — the conclusion, and the moves to make:
- For US East Coast spot cargo, question any conflict or bunker surcharge tied to Hormuz or the Red Sea, and ask the carrier to confirm what share of your lane's boxes actually transits those routes before paying it.
- Track blank-sailing announcements from the three largest transpacific carriers weekly; the first meaningful capacity block is your signal to stop waiting on the drift and lock the spot rate.
- If you are on a spot or indexed contract, model the all-in invoice including surcharges separately from the headline rate, because the surcharge can rise while the rate falls.
- On the US East Coast lane, where the base is highest, lock a fixed or capped rate now rather than ride the 1 percent drift, because the 234 percent-over-base gap leaves far more downside than the weekly slip recovers.
- For Mediterranean and North Europe volume, use the 1 percent weekly drift to your advantage on spot bookings, but cap your exposure with a rate ceiling clause in case carriers coordinate a capacity cut and reverse the slide.
Xeneta's weekly update put market average spot rates on 24 July 2026 at $6,225/FEU Far East to US West Coast, $8,846 to the US East Coast, $5,212 to North Europe and $6,510 to the Mediterranean, down 1% week on week on three of the four lanes and flat to the US East Coast. Senior shipping analyst Emily Stausbøll said rates remain 231% to 234% above their 28 February pre-crisis level on the transpacific and warned that no carrier wants to be first to pull significant capacity, limiting the scope for blank sailings to arrest the decline. She added that carriers will cite the renewed US-Iran conflict and higher bunker costs to justify surcharges even though almost no container vessels were transiting Hormuz or the Red Sea before the escalation.
The Analysis
Xeneta's weekly update put the market average spot rate on 24 July 2026 at 6,225 dollars per FEU from the Far East to the US West Coast, 8,846 to the US East Coast, 5,212 to North Europe and 6,510 to the Mediterranean. Three of the four lanes slipped about 1 percent week on week, with the US East Coast flat. Xeneta's senior analyst noted rates still sit 231 to 234 percent above the 28 February pre-crisis level on the transpacific.
A 1 percent weekly slip is noise. The real number is the 231 to 234 percent above the late-February base, because that tells you how much air is still in the rate even as it drifts down.
We take the four lane prints apart before we take the drift. What the 234 percent means in dollars, why the decline is sticky, and the one justification carriers are using that the data does not support.
Start with the four prints as a map. Far East to US West Coast at 6,225, to US East Coast at 8,846, to North Europe at 5,212, to the Mediterranean at 6,510. The US East Coast is the most expensive of the four by a wide margin, about 42 percent above the West Coast and about 70 percent above North Europe. The Mediterranean sits above North Europe by roughly 25 percent. So the same box leaving the same Asian load port is priced very differently by destination, and the spread is not explained by distance alone once you compare the two US coasts against the two Europe legs. The East Coast premium is the structural one here, and it is the lane where a 1 percent move costs you the most per box because the base is highest.
Now read the 231 to 234 percent above 28 February. That base is the pre-crisis level, the rate before the latest disruption lifted everything. Take the US West Coast at 6,225: if that is roughly 233 percent above the base, the base itself was near 1,870 dollars, which means the rate has come down from its peak but is still more than three times the late-February floor. The Mediterranean at 6,510 against a similar base implies the same multiplier. The point is not that rates are high; the point is how much room remains below them. A rate that is 230 percent above its floor has a long way to fall before it touches normal, and every week of 1 percent drift takes only a small bite out of that gap. The drift feels gentle; the distance to the floor is not.
The causal chain for the sticky decline is the key insight in the update. The analyst warned that no carrier wants to be first to pull significant capacity, which limits blank sailings as a tool to arrest the fall. Think about that. Normally when rates soften, carriers blank sailings to tighten supply and stop the slide. Here the carriers are holding back from the usual move because being first to cut capacity means giving up market share and letting rivals fill the gap. So the mechanism that would normally halt a decline is jammed. The decline continues not because demand is collapsing but because no single carrier will start the capacity discipline that would require all of them to move together. It is a coordination problem dressed as a rate problem.
Who feels this and by how much depends on which lane and what contract. A spot shipper on the US East Coast at 8,846 feels the full rate and the 1 percent slip, but still pays roughly 234 percent over the base, so the saving from the drift is tiny against the absolute level. A shipper on an annual contract indexed to spot feels the drift at the next reset, mildly. A shipper on a fixed rate feels nothing yet. The range of impact runs from zero for fixed-rate BCOs to the full elevated spot for the East Coast spot buyer, who is the most exposed because that lane combines the highest base with the slowest relief.
Transmission timing is the part to put on the calendar. Weekly spot prints reprice bookings as they are made, so the 1 percent drift hits a spot shipper immediately on the next booking. Contract resets lag by the contract period. My working assumption, stated explicitly, is that a 1 percent weekly drift sustained for a quarter would take roughly 12 to 13 percent off the spot rate, but because carriers resist blank sailings, the drift could persist or even accelerate if demand softens. The lead time to act is short for spot: every week you wait, the rate is a percent lower, but still far above floor, so the question is not whether to wait but whether to lock before carriers finally coordinate a capacity cut that would reverse the drift.
Here is the overlooked point, and it is the one that bites. Carriers are citing the renewed US-Iran conflict and higher bunker costs to justify surcharges, even though almost no container vessels were transiting the Strait of Hormuz or the Red Sea before the escalation. Read that twice. The surcharge is being justified by a disruption that, for container shipping, was not happening on those routes to begin with. The Red Sea rerouting already moved most Asia-Europe volume around the Cape months ago, and Hormuz carries energy, not containers, in any meaningful volume.
So the bunker and conflict surcharge here is a pricing lever, not a cost recovery. The overlooked risk is that you pay a surcharge justified by a route your boxes never used. The spot rate may be drifting down 1 percent, but the surcharge can be layered on top regardless, and the net invoice can rise even as the headline rate falls. Watch the surcharge line, not just the rate line; the drift is the distraction, the surcharge is the real margin.
The counterfactual is worth holding. If one major carrier finally blinks and blanks a meaningful block of capacity, the others may follow, the coordination unjams, and the drift reverses, lifting rates off the slow slide. If no carrier blinks and demand softens further, the 1 percent drift continues and the gap to the floor closes faster. The condition that flips the conclusion is simply who moves first on capacity. Watch the blank-sailing announcements from the three largest transpacific carriers; the first meaningful block is the signal that the drift has ended, and that is the moment a spot shipper should stop waiting and lock.
Worked example, assumptions explicit: a shipper moving 80 FEU a month to the US East Coast at the 8,846 spot. Monthly ocean line is 707,680 dollars. The 1 percent weekly drift, if sustained, would cut roughly 7,000 dollars a month after four weeks, small against the level. But assume a conflict surcharge of 400 dollars per FEU is added on top, justified by the Hormuz narrative; that is 32,000 dollars a month added, overwhelming the drift saving. Net, the invoice rises about 25,000 dollars a month despite the rate falling. The explicit assumption is a 400 dollar surcharge on a lane where almost no boxes use Hormuz; the point is that the surcharge, not the drift, decides your cost.
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