In the second quarter of 2026, the global ocean freight market experienced a surge far exceeding expectations, shattering any hopes of a rate decline. According to data from the Shanghai Shipping Exchange on June 18, the SCFI index rose for the eighth consecutive week, climbing to 3,121.69 points with a weekly gain of 4.57%. This not only erased all declines from the first quarter but also set a new high for the year. For textile exporters operating on razor-thin margins, this represents a structural shock.
Freight Rates Surge Across the Board: From US Routes to South America
The current price hike is not limited to specific routes but covers all major global arteries, including near-sea, South American, and Australian-New Zealand routes. US routes led the surge: the US West Coast rate jumped $582 to $5,683 per FEU (up 11.41% week-on-week), while the US East Coast rate rose $552 to $6,873 per FEU, approaching the $7,000 mark. This means the cost of shipping a 40-foot container to the US East Coast now rivals the value of some low-value-added textile products.
South American routes also saw dramatic increases. The Santos route rate rose $621 to $8,212 per TEU, a weekly gain of 8.18%. For exports to South America, freight costs alone could account for over 20% of the order value. European base port rates also rose to $3,158 per TEU, while Mediterranean rates held steady at $4,260 per TEU.
Near-sea routes showed smaller overall increases but significant divergence. Japan routes remained flat, while South Korea rates jumped $27 to $188 per TEU, and Southeast Asia rates edged up $7. This divergence suggests that pricing pressure is spreading from deep-sea to near-sea routes, with some markets potentially becoming the next focus of rate hikes.
Suez Canal Surcharge Adds Another Layer of Cost
Beyond freight rates, transit costs through the Suez Canal are also set to rise. The Suez Canal Authority announced a 12% surcharge on most vessel types, effective July 15, 2026. Container ships will continue to pay a 12% surcharge, dry bulk carriers will see their surcharge rise from 10% to 22%, and oil tankers will face an increase from 25% to 37%.
This adjustment comes amid a recovery in canal traffic. Egypt's Central Agency for Public Mobilization and Statistics reported that total vessel transits in April 2026 increased 14% year-on-year to 1,182, with oil tanker transits surging 28%. Canal revenue reached $419 million in April, up 27% year-on-year, the highest monthly figure since early 2024. Although the situation in the Strait of Hormuz temporarily disrupted shipping, vessels diverted to Red Sea routes actually boosted Suez Canal utilization.
For textile exporters, this means that even if the pressure to reroute via the Cape of Good Hope eases, transit costs will not decline. The Suez Canal surcharge hike will directly push up freight rates on Asia-Europe routes, which are key markets for Chinese textile exports.
Textile Export Growth Slows: Freight Becomes the Wild Card
Chinese customs data shows that in the first five months of 2026, China's textile and apparel exports totaled $116.73 billion, up only 0.1% year-on-year. Textile exports reached $59.48 billion (up 1.7%), while apparel exports totaled $57.24 billion (down 1.6%). This growth rate lags far behind the 11.8% overall growth in China's goods exports during the same period.
The contrast between soaring freight costs and stagnant export growth is stark. Textile companies are not benefiting from the overall export boom but are instead bearing the full brunt of rising freight charges. For example, a weekly increase of over $500 on US routes can wipe out the profit margin on hundreds of garments, given that a single cotton T-shirt may yield only a few cents in profit.
Moreover, peak-season surcharges have become widespread. Major shipping lines have imposed surcharges of $1,000 to $1,500 on US routes since June, further inflating actual transportation costs. For small and medium-sized textile exporters that rely on thin margins and high volumes, accepting orders may mean incurring losses, while declining orders risks losing customers to competitors.