Shipping rates stay elevated despite Strait of Hormuz reopening, boosting carriers' Q2 earnings

Maritime freight rates have continued to climb even after the United States and Iran signed a memorandum of understanding to end hostilities. While vessels stranded in the Strait of Hormuz have since departed, analysts say it is too early for shipping logistics to return to prewar levels — and demand to front-load cargo ahead of US tariffs is adding further upward pressure on rates. South Korean carriers are nonetheless expected to report solid second-quarter earnings despite the fallout from the Middle East crisis.

Major domestic shipping companies are forecast to post operating profit growth of more than 10 percent year-on-year in the second quarter, according to securities industry sources Tuesday. Consensus estimates compiled by FnGuide put HMM's second-quarter revenue at 3.04 trillion won ($1.97 billion) and operating profit at 299 billion won, representing year-on-year increases of 16.1 percent and 28.2 percent, respectively.

Industry observers say the strong earnings momentum is closely tied to global container freight rates, which have surged to their highest levels of the year. The Shanghai Containerized Freight Index, the benchmark for global container shipping rates, stood at 3,239.64 on Friday, June 26, marking nine consecutive weeks of gains.

The SCFI's strength in the second quarter reflects two forces working simultaneously: geopolitical risk in the Middle East and a surge in early shipments as exporters sought to take advantage of the US reciprocal tariff suspension window. Although transit through the Strait of Hormuz has resumed, passage remains far from the freedom seen before the war — war-risk insurance premiums, vessel waiting costs and schedule disruptions are all feeding into freight rates. Expectations that the Trump administration will announce additional tariff measures have also spurred shippers to move cargo forward.

Analysts say HMM likely offset losses from the Strait of Hormuz blockade through higher freight rates. At its first-quarter earnings briefing, HMM had warned that five container and bulk vessels trapped in the strait were generating daily losses of tens of billions of won or more.

Bulk carriers Pan Ocean and Korea Line also posted strong consensus estimates for second-quarter operating profit — 144 billion won, up 17.1 percent year-on-year, and 61 billion won, up 84.7 percent, respectively. The Baltic Dry Index, the benchmark for bulk shipping rates, rose from 1,882 at the start of the year to around the 3,000 level in June.

"There were serious concerns about rising costs for carriers due to the Strait of Hormuz blockade and higher oil prices in April and May, but the combination of freight rate increases and front-loading demand appears to have offset some of those losses," an industry official said.

However, some analysts warn that rates could fall later in the year as peak-season demand has effectively been pulled forward into the current quarter. Progress in US-Iran peace negotiations could ease geopolitical risk, while deliveries of new container ships and bulk carriers are expected to expand supply beyond replacement demand.

According to Samsung Securities, the container ship order backlog currently stands at 38.5 percent of total fleet capacity and the bulk carrier backlog at 13.3 percent, while scrapping volumes remain well below historical averages.

"Both the average SCFI and BDI were elevated in the second quarter, and carriers are expected to report strong results for the period — but it is hard to guarantee that favorable conditions will extend into the second half," said Kim Young-ho, a researcher at Samsung Securities. "US-Iran peace negotiations could trigger a correction in maritime freight rates, pointing to a pattern of strong first-half performance followed by a weaker second half."