Rising Tide

How the Iran-Israel Conflict is Driving Freight Rates Higher for European Importers of Chinese Foodstuffs

FREIGHTNEWS

6/17/20252 min read

Container Terminal
Container Terminal

As the June 2025 flare-up between Iran and Israel disrupts the Red Sea and Strait of Hormuz, container carriers are forced to reroute around Africa’s Cape of Good Hope. That adds 7–10 days to voyages from China to Europe and has driven spot rates sharply higher. Below you’ll find the latest sea-freight data from Drewry and Xeneta, an explanation of what’s behind the spikes, and practical steps you can take to protect your margins.

  1. Drewry: World Container Index at a Four-Month High

Drewry’s World Container Index (WCI) tracks the global average spot rate for 40 ft containers across eight major trades. As of 12 June 2025, the WCI hit US $3 543 per FEU—up 59 percent over the past four weeks as vessels detour south and bunkersurcharge premiums kick in.

  1. Xeneta: Shanghai → North Europe Rates Surge

Xeneta’s real-time benchmarking shows the spot rate for a 40 ft box from Shanghai to Northwest Europe jumping 17 percent—from US $2 700 in mid-May to US $3 150 by mid-June—reflecting rerouting surcharges and capacity shifts away from Red Sea transits.

  1. What’s Behind the Spike?

• Forced rerouting: Vessels avoiding the Red Sea and Strait of Hormuz add fuel-hungry days to each voyage.

• Bunker-surcharge premiums: Carriers pass on higher fuel and insurance costs tied to longer loops and war-risk zones.

• Increased lead-time risk: Longer transit times tie up containers in circulation, tightening equipment availability and lifting spot rates further.

  1. Action Steps for European Importers

• Lock in multi-month deals—negotiate fixed-rate contracts now to hedge against further volatility.

• Diversify routing—blend direct China→Europe sailings with feeder services via the Northern Sea Route or Mediterranean transshipments.

• Boost safety stock—build 2–3 weeks of extra inventory in European warehouses to buffer against extended lead times.

• Monitor indices daily—subscribe to Drewry’s WCI alerts and Xeneta’s lane-specific reports to spot repricing opportunities or dips.

Bottom Line

If the Iran–Israel conflict persists, expect sea-freight from China to Europe to remain elevated—likely above US $3 500 per 40 ft container through Q3 2025. Early planning, blended routing and proactive contracting are your best defenses against these emerging cost pressures.

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