The Merchant · n°151 · June 19, 2025

Shippers get a breather but new shock looms

🚢 Rates from bottom to top and vice versa
🛢️ Hormuz in the crosshairs
✈️ Concern over rare earths

Figure of the week

122,094 The number of containers imported in TEU whose arrival is scheduled this week at the port of Los Angeles — an increase of 29% compared to the previous week and a 41% rise compared to the same week last year.

Quote of the week

“Everyone should evacuate Tehran.” Donald Trump on his Truth Social network during the night of June 16 to 17. The President of the United States abruptly left the G7 summit, specifying in another post that he was not returning to work on a cease-fire.

A lull in rates … and some concerns

On maritime routes, the market is more volatile than ever and freight rates are experiencing sharp swings. The SCFI index notably records a 20% drop in rates between Shanghai and the US West Coast. Toward the East Coast, prices have fallen only slightly. Other routes continue to see rates rise. This is the case toward the Atlantic coast of Latin America, where a spectacular 239% increase over six weeks is being seen. Finally, the brand-new NYSHEX Freight Indices (NYFI) notes a clear increase in rates for shipments in Northeast Asia. For Lars Jensen, founder of Vespucci Maritime, this is a weak signal to watch closely: “I hypothesize that this could be explained by the fact that many services coming from China are already saturated with Chinese freight even before calling at Northeast Asian ports, which de facto reduces the capacity available for this region.” Congestion remains a huge problem.

Even if some routes remain tight, such as the Asia-Europe axis, characterized by high rates and well-filled ships, signs of a rebalancing are appearing. There is no need to get carried away, however: for Linerlytica, the recent downward adjustments in the SCFI index are a sign of a return to normal after weeks of extremely sharp increases. Moreover, professionals remain cautious: if activity were to pick up again, they are better prepared than during previous crises. This is evident when observing container production: 2.3 million were manufactured in 2025, with stocks at a record 1.55 million TEU. This accumulation should avoid a logistics crisis comparable to that of 2021, when the post-COVID recovery was complicated by a container shortage.

The market therefore remains rather well supplied with equipment, even if visibility over the coming weeks and months remains all the weaker as the geopolitical and tariff situation remains extremely unclear. While the partial trade agreement between the United States and the United Kingdom was signed on the sidelines of the G7 — lowering certain duties on cars and aeronautical products — most of the taxes on steel and aluminum remain pending. In other words, the actual content of the deal is still very vague. Despite a slight easing of tensions between China and the United States in London last week, the situation remains very uncertain and no lasting framework is emerging, notably on the critical issue of rare earths. Finally, Donald Trump confirmed that there would be new tariff increases on European automobiles and products starting July 9, while negotiations between the European Union and the United States are stalling… The saga that began in April is thus far from over. It is hard to believe it will not continue to affect supply chains.

A strait at war?

The war between Israel and Iran reached a new level on June 13, 2025. In the field of logistics, it was first air transport that was affected. Many airlines temporarily suspended their flights to Israel, Iran, Iraq or Jordan. Flight-path diversions weigh heavily on operating costs. Already disrupted by the closure of Russian airspace, the main routes between Europe and Asia must now bypass the Middle East via Egypt or Central Asia. For June 13 alone, nearly 1,800 flights were affected, according to Eurocontrol. Worse! These lengthened itineraries reduce air freight capacity. After all, fuel is expensive.

At sea, while the Israeli strikes have not for the moment led to direct attacks on commercial shipping, it would be absurd to underestimate the risks. For now, the Strait of Hormuz remains open, but the number of transits fell from 147 to 111 in one week, according to the United Kingdom Maritime Trade Operations (UKMTO). And ships now avoid passing near Iran, which is creating significant congestion around the United Arab Emirates. For Lars Jensen, founder of Vespucci Maritime, the industry remains very vulnerable: “If the major carriers avoid Hormuz, ports like Jebel Ali or Khalifa would be heavily disrupted.” In the event that the strait were closed, 3.4% of global container traffic would be affected. Ultimately, the Iran-Israel conflict makes a large-scale reopening of the Suez Canal ever more improbable.

In addition to supply chains, it is global energy resources that are at risk. While Iran today represents a negligible share of global oil consumption, Hormuz is a key territory. This passage sees 20% of the world’s crude oil and more than 17 million barrels per day transit through it. A closure — already mentioned by the Iranian Parliament — would trigger a surge in oil prices. It would completely redirect maritime flows, notably toward the west coast of India. “Such an interruption, even temporary, would have a cascading effect on maritime freight rates and on global capacity, already under strain,” warns Peter Sand, chief analyst at Xeneta.

The first half of 2025 is not over and it feels like we have lived through a decade.

A welcome and temporary respite

The temporary trade agreement concluded on Tuesday, June 10 in London between the United States and China includes the conditional resumption of Chinese rare-earth exports for six months. It will have immediate repercussions on the future of global aviation. But it does not lift the many uncertainties weighing on a critical sector. Some rare earths are indeed essential to the manufacture of aircraft engines: companies as important as General Electric or the CFM International consortium (GE/Safran) are thus particularly exposed. The partial unblocking announced in London amounts to placing a sword of Damocles over the entire aeronautical supply chain. Many manufacturers are now considering redirecting their supply routes: South Korea thus saw its exports of strategic electronic components jump 22% in June according to the Korea Customs Service.

The uncertainty weighing on the sector is symptomatic: no one believes that the technological standoff between China and the United States will conclude soon. The United States is maintaining its restrictions on advanced semiconductors, crucial components of navigation systems, embedded AI and flight management. This compromises the ambitions of the Chinese manufacturer COMAC, which still depends largely on Western technologies to develop its C919. In short, as it stands, the London agreement settles nothing. It marks a pause that should allow the main players in the aeronautical industry to consider technological conversions and strategic relocations. No one escapes the Sino-American rivalry.

👋 See you next week, The Merchant team

Sources

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