A container ship departing from Shanghai port saw the freight rate for a 40-foot container to the US West Coast jump by $582 in a single week, approaching $5,700. On June 18, the Shanghai Containerized Freight Index (SCFI) recorded its eighth consecutive weekly gain, closing at 3121.69 points, a new high for the year. For textile and apparel exporters operating on razor-thin margins, every dollar increase in freight costs directly eats into the final profit of each order.
Rates Surge Across All Routes, Short-Sea Lines Feel the Heat
The current rate hike is not isolated to a single trade lane but covers major global trunk routes and short-sea feeders. The US West Coast rate surged to $5,683 per FEU, up 11.41% week-on-week; the US East Coast reached $6,873 per FEU, approaching the $7,000 mark. European base port rates climbed to $3,158 per TEU, and Mediterranean rates hit $4,260 per TEU. The Santos route in South America broke through $8,200 per TEU, a weekly increase of 8.18%.
Significantly, short-sea routes are also showing signs of upward pressure. Southeast Asia rates edged up to $689 per TEU, while the Korea route jumped $27 to $188 per TEU. Although the Japan routes (Kanto and Kansai) remained stable, the market expects them to follow suit. This means that even for short-haul shipments, exporters cannot find a cost haven.
Canal Surcharges Add Insult to Injury
Compounding the freight rate surge, the Suez Canal Authority announced in June that it would raise transit surcharges by 12% for most vessel types, effective July 15. Container ship surcharges remain at 12%, but dry bulk carriers jumped from 10% to 22%, laden tankers from 25% to 37%, and car carriers on northbound voyages doubled from 14% to 26%.
This adjustment comes after the 2026 US-Iran conflict disrupted traffic through the Strait of Hormuz, diverting many vessels to the Red Sea route and boosting Suez Canal traffic. Egyptian official data shows that in April 2026, 1,182 vessels transited the canal, up 14% year-on-year, with tanker traffic surging 28%. Canal revenue reached $419 million in that month, up 27% year-on-year and the highest since early 2024. By raising surcharges amid rising traffic, the canal authority is clearly maximizing revenue from the current supply-demand imbalance.
Textile Export Growth Diverges Sharply from Freight Trends
China Customs data for the first five months of 2026 shows that while total merchandise exports grew 11.8%, textile and apparel exports increased by only 0.1%, with apparel exports actually falling 1.6%. The textile sector has not benefited from the overall trade boom but is forced to bear the full brunt of skyrocketing freight costs.
This divergence highlights the weak bargaining power of textile exporters in the supply chain. When freight rates rise, overseas buyers often refuse to share the additional cost, leaving exporters to absorb it to retain orders. For a garment order with a profit margin of only 3-5%, a $582 increase per container on the US West Coast route can wipe out all profit.