The Strait of Hormuz is open, so why are freight rates still climbing?

For weeks, the global shipping industry has been asking the same question: If the Strait of Hormuz is open again, why haven't freight markets returned to normal?

The answer lies in a shipping reality that extends far beyond a single waterway.

Although commercial traffic has resumed through the Strait of Hormuz following the ceasefire between the United States and Iran, vessel movements remain well below normal levels. According to ship-tracking data cited by Reuters, tanker transits fell sharply this week, highlighting that confidence has yet to return to the Gulf. On Wednesday, 27 tankers transited the Strait. The number declined to 24 on Thursday, before dropping further to just 13 on Friday after a merchant vessel was attacked near Oman. Overall, only 62 ships crossed the Strait on 24 June, roughly half the traffic recorded on the same date last year.

Those figures tell an important story.

The Strait itself is no longer closed, but shipping companies remain cautious. Several tanker operators are delaying departures, reassessing voyage plans and waiting for updated security guidance before sending vessels into the Gulf. War-risk insurance premiums remain elevated, while charterers continue to monitor the security situation on a voyage-by-voyage basis. Even a single security incident is enough to disrupt carefully planned schedules across an entire shipping network.

However, blaming Hormuz alone would be misleading.

The container shipping market is currently facing a combination of challenges, many of which have little to do with the Strait itself.

The biggest driver today is the annual export surge from China.

As manufacturers accelerate shipments for the autumn retail season in Europe and North America, demand for vessel space on Asia-Europe routes has risen sharply. Shipping lines naturally deploy more capacity to trades generating stronger cargo volumes and higher freight returns. In practice, this means larger vessels are increasingly allocated to Chinese export hubs, leaving fewer sailings and less available space for neighbouring markets such as India.

This shift may not appear dramatic on a weekly vessel schedule, but its cumulative impact is significant. Indian exporters are already reporting tighter space availability, longer booking lead times and higher spot freight quotations, particularly for Europe-bound cargo.

Congestion is adding another layer of pressure.

The Middle East conflict disrupted vessel schedules for several months, and shipping networks are still recovering. Delayed arrivals at major transshipment hubs including Singapore, Colombo, Port Klang and Jebel Ali have extended berth waiting times and reduced schedule reliability. A vessel delayed by even two days at one port often arrives late at every subsequent port on its rotation, creating a ripple effect that can last for weeks.

This is known in the shipping industry as effective capacity loss. The global fleet size has not changed significantly, but because ships complete fewer voyages each month, the amount of available cargo space effectively shrinks.

Equipment availability has also tightened.

Containers returning from Europe are taking longer to reach Asian export markets due to disrupted schedules and slower vessel rotations. Exporters in eastern India, who depend heavily on feeder services through Colombo or Singapore, are feeling the impact more than many west coast shippers.

Against this backdrop, MSC's decision to increase Freight All Kinds (FAK) rates from India to Europe should not be viewed as an isolated pricing announcement. It reflects a market where supply and demand have once again moved out of balance.

Several other carriers have adopted similar pricing strategies as stronger cargo demand coincides with reduced network efficiency and continued geopolitical uncertainty.

For Indian exporters, the lesson is clear. Freight planning can no longer rely solely on published sailing schedules or base ocean freight. Vessel deployment strategies, transshipment congestion, geopolitical developments, bunker costs and equipment availability are increasingly shaping the final logistics bill.

The Strait of Hormuz may have reopened, but global shipping has not yet returned to business as usual.

Until congestion eases, vessel schedules stabilise and additional capacity returns to Indian trades after China's peak export season, freight rates are likely to remain firm. In today's interconnected maritime industry, a conflict in the Gulf, congestion in Singapore and a surge in Chinese exports can all influence the freight quotation received by an exporter in Mumbai, Mundra or Kolkata.

That is the new reality of global container shipping.