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Container Rates Slip as Middle East Tensions Reshape Trade Routes

Asia-U.S. West Coast ocean rates declined 6% to $7,067 per forty-foot equivalent unit for the week ending July 17, marking a pullback from tariff-driven peak season gains. East Coast rates held steady at $9,102 per FEU. Escalating Middle East hostilities have severely disrupted shipping corridors. Traffic through the Strait of Hormuz has contracted sharply as regional tensions persist. The conflict has expanded to the Bab el-Mandab strait. Following Houthi announcements regarding Saudi-linked vessels, feeder vessels altered voyages, though enforcement mechanisms remain unclear. Major carriers including Maersk and CMA CGM face pressure to modify Red Sea service resumption plans. Potential rerouting of Asia-Saudi shipments around Africa could substantially strain Asia-Mediterranean services. Meanwhile, global crude oil prices have surged 20% since early July, with bunker costs climbing 12%. Proposed 50% tariffs on Canadian imports add further uncertainty to freight markets.