When the Strait of Hormuz reopened to traffic, the market widely expected ocean freight rates to fall. But the reality is the opposite: in Q2 2026, global shipping costs have entered their most aggressive rally since the pandemic, with the Suez Canal even imposing additional surcharges. For the already thin-margin textile export sector, this surge is fundamentally reshaping cost structures.
Rates Surge Across the Board
Data from the Shanghai Shipping Exchange on June 18 shows the SCFI index rising for eight consecutive weeks to 3121.69 points, a weekly gain of 4.57%, wiping out all Q1 losses and hitting a new year-to-date high. Notably, this rally is not localized but covers all major global routes, including near-sea, South America, and Australia-New Zealand, leaving almost no low-rate corridor.
The US West Coast route saw the most dramatic increase: the 40-foot container rate hit $5,683, up $582 in a single week, a 11.41% jump. The US East Coast rate approached $7,000, reaching $6,873 with an 8.73% weekly gain. European base port rates stood at $3,158/TEU, while Mediterranean rates climbed to $4,260/TEU. The Santos, South America route reached $8,212/TEU, up 8.18% week-on-week.
Near-sea routes showed divergence: Japan rates were flat, while South Korea jumped $27 to $188, and Southeast Asia edged up $7. Even short-haul shipping costs are being passively pushed higher.
Canal Surcharges Add to the Burden
Beyond ocean freight increases, the Suez Canal Authority has raised transit surcharges. Effective July 15, surcharges for most vessel types will increase by 12%. For container ships, the surcharge remains at 12%; dry bulk carriers see a hike from 10% to 22%; fully loaded tankers from 25% to 37%.
This adjustment comes as the 2026 US-Iran conflict temporarily blocked the Strait of Hormuz, diverting vessels to Red Sea routes and boosting Suez Canal traffic. Egypt's state statistics agency reported that in April 2026, total vessels transiting the canal rose 14% year-on-year, with oil tanker numbers surging 28%. Monthly canal revenue hit $419 million, up 27% year-on-year, the highest since early 2024.
While the canal authority calls these surcharges temporary, for textile exporters, every dollar is a real cost.
A Tale of Two Exports
Customs data shows China's total goods exports grew 11.8% in the first five months of 2026, but textile and apparel exports only inched up 0.1% to $116.73 billion. Textile exports rose 1.7% to $59.48 billion, while apparel exports fell 1.6% to $57.24 billion.
This means the textile sector is not sharing in the overall export boom but is bearing the full brunt of soaring freight costs. For an order worth $100,000, if freight rises from $3,000 to $6,000, profit margins could be halved. Many small and medium textile firms report that freight now accounts for 15% to 20% of order value, well above normal levels.
More worryingly, this high-freight environment may not be short-lived. With carriers adding peak-season surcharges, canals raising fees, and multiple routes climbing in tandem, the signs point to high transport costs becoming the new normal.
Impact on Procurement and Production
High freight is changing procurement patterns. Overseas buyers, once favoring small, frequent replenishment orders, are now consolidating shipments to reduce per-unit transport costs. This challenges China's textile supply chain, which has thrived on quick response.
At the same time, rising freight is forcing industrial adjustment. Low-value-added products like basic grey fabrics and low-end home textiles are seeing their profit margins squeezed to near zero. In contrast, high-value items such as functional fabrics and branded garments, with higher unit prices, are less affected by freight cost spikes.