The freight rally the bears keep calling wrong

Alt. headline: Why this rate spike has structural legs – AI, batteries and a broken Hormuz

Alt. headline: Carriers upgrade profits as the “2021 again” call misleads

The SCFI is up 150% since February and carriers are racing to lift profit forecasts. It looks like 2021 all over again – which is exactly why so many are mispricing it.

There is a reflex in this market, and it fires every time rates run: this is 2021 again, a one-off spike that will collapse the way the last one did. The SCFI is up roughly 150% since late February and 11% since the mid-June truce alone; time-charter rates are near cycle highs; forwarders and carriers are reporting sharply better numbers. The bears see the shape of the curve and reach for the obvious conclusion. I think the obvious conclusion is the trap.

Look at where the second-quarter surge actually landed. Asia–US West Coast spot rates jumped 172% and the East Coast 141%; Asia–North Europe rose 61% and the Mediterranean 74%. Those are not the numbers of a fading trade – they are the numbers that just pushed Hapag-Lloyd to lift its 2026 EBITDA guidance to $2.7–3.7bn from as low as $1.1bn, and turned OOCL’s quarter into a 19.8% revenue jump. Even Taiwan’s big three swung back to recovery.

Figure 1 – The Q2 jump was broad and steep across every East-West lane – the kind of move now driving carrier profit upgrades.

Why this time the base is different

The 2021 analogy fails on the demand side. That spike was a consumption bubble – locked-down households buying goods. This one sits on structural freight: cargo tied to AI data centres, batteries and electric vehicles, plus fast-rising volumes into Africa and South America, holding up even as headline Chinese exports soften. Underneath it is a supply squeeze that is not going away on its own – Hormuz diversions cutting effective capacity, and port congestion at a four-year high.

The obvious conclusion – “2021 again” – is the trap.

You can see the pricing power in the surcharges. Maersk is adding a $1,000-per-container emergency charge on India–Europe from August; peak-season GRIs and PSS landed on 1 July. Carriers only make charges like that stick when they believe the demand is real, not borrowed.

The strongest case against me

The bears are not wrong about the danger – they are wrong about the timing. The 2027–28 order book is enormous, and when that tonnage arrives it can overwhelm even structural demand. That is a genuine risk, and it caps how long this runs. But a wall of ships due in eighteen months does not cool a market squeezed by a war today. Confusing the medium-term glut with the near-term tightness is precisely how you misprice both.

A wall of ships due in eighteen months does not cool a market squeezed by a war today.

What I would watch

Three gauges. Whether the July GRIs and surcharges hold past a fortnight – the cleanest test of real demand. The structural-cargo signals – AI, battery and EV volumes, and Africa/South America growth – that separate this from a consumption bubble. And the first 2027 delivery slippage or acceleration, which sets the clock on when the glut finally bites.