The ocean freight market is headed for a 25% structural deflation by 2026 due to global overcapacity of vessels ordered after the pandemic and weak demand. The potential normalization of traffic in the Red Sea will accelerate this decline by releasing tonnage into the market.
At AGC Newtral, we recommend focusing your strategy on contractual flexibility with adjustment clauses to capitalize on minimum prices and on auditing the total logistics cost, prioritizing service reliability over the base price. Furthermore, managing geopolitical risk requires maintaining the Cape of Good Hope route as a resilient alternative and assessing the stability of the Panama Canal.
Preguntas que hemos resuelto en este artículo
- Why are ocean freight rates expected to fall by 25% in 2026?
- What role does instability in the Red Sea and the Persian Gulf play in freight prices?
- How might structural excess capacity of vessels affect my logistics planning?
- What types of long-term freight contracts should I negotiate in the face of falling prices?
- How does the Panama Canal’s water stability influence the Transpacific route?
- How can I mitigate variable cost risks (surcharges and reliability) in a deflationary market?
At AGC Newtral, our mission is to ensure you, as an importer or exporter, always have a competitive edge. The global maritime market is at a critical crossroads: spot rates are showing a technical rebound, but the 2026 horizon is marked by unavoidable structural overcapacity. We are facing a projected price collapse. It is imperative that you understand the dynamics driving these changes in order to restructure your contracting strategy.
We have analyzed expert forecasts and the geopolitical tensions in the Red Sea and the Persian Gulf. Here we explain the problem, why it is happening, and how you can prepare.
The inevitable 25% drop in spot rates: imbalance and deflation
The biggest medium-term challenge for strategic planning is the fundamental imbalance between supply and demand that is looming.
Desequilibrio de capacidad vs demanda
Analysts Xeneta and Drewry have issued a stark warning: global container ship capacity growth (3.6%) will outpace demand growth (3.0%) in 2026. This imbalance is the driving force behind an average 25% drop in spot rates during 2026, with a 10% decline for long-term container contracts (LTCs).
The cause of this oversupply is straightforward: the massive influx of vessels ordered during the peak years following the pandemic. Now, this structural excess tonnage is reaching the market. At the same time, demand remains weak. The global economic slowdown, coupled with tariff policies and adjustments in consumption, has reduced import volumes. Spain, as a key hub in the Mediterranean and a gateway to Asia and Europe, will directly feel this impact. The drop in spot prices will immediately make imports cheaper, but weak global demand is a symptom of economic uncertainty that affects us all.ación, pero la debilidad de la demanda global es un síntoma de incertidumbre económica que nos afecta a todos.
Take advantage of deflation with contractual flexibility
The price drop gives you considerable negotiating power. You should maximize your ability to take advantage of these future lows as follows:
- Short-term contracts and adjustment clauses:
- What to do: Limit new long-term contracts (LTCs) to short durations, ideally less than one year. Require the inclusion of renegotiation clauses that allow for downward price adjustments if the spot market falls significantly.
- Why it works: If you lock into a two-year LTC today, you’ll miss out on the up to 25% lower rates projected for 2026. Flexibility allows you to renegotiate or move your cargo to the spot market when it bottoms out.
- Negotiation focused on reliability:
- What to do: With base freight rates falling, your focus should shift to service quality. Negotiate contractual incentives for reliability. If overall service reliability fell to 61.4% in October 2025, it’s fair to demand compensation for the extra time and cost associated with that inefficiency.
- Why it works: Overhead costs and transit time remain high. By securing reliability incentives (such as penalties for delays or blank sailings), you mitigate the impact of poor logistics that would otherwise disrupt your supply chain, even with a cheaper base freight rate.
Geopolitics as an accelerator of the fall and the bifurcation of risk
The year 2024 saw carriers achieve unexpected profitability thanks to geopolitical disruptions, such as the Red Sea trade dispute, which acted as a “capacity buffer” by consuming tonnage on longer routes. Without that buffer, overcapacity will suddenly emerge.
The risk of normalization in the Red Sea
If security in the Red Sea is effectively and sustainably restored, the capacity released to the global market will be enormous. This capacity will flood the Transpacific and Asia-Europe markets. Therefore, the normalization of the Red Sea route will accelerate the anticipated 25% price decline by removing the last significant constraint on oversupply.
Why does this happen and how does it affect Spain?
The carriers’ caution is the crux of the matter: they do not expect full normalization before the second quarter of 2026 at the earliest. Although Allied War Risk Premiums (AWRPs) have fallen from 0.5% to around 0.2% following a truce, shipping lines are demanding “proof through multiple safe transits” before a full return. For Spain, this means that while the arrival of additional capacity will lower Asia-Europe freight rates, the risk has shifted to the Persian Gulf, where the Iranian escalation has doubled risk premiums. Risk management in the Middle East is now geographically bifurcated.
You shouldn’t resume traffic through Suez immediately just because the risk of attack has decreased. Caution is the best insurance policy.
- Maintaining the Cape of Good Hope Route:
- What to do: We maintain the Cape of Good Hope detour as a resilience route for Asia-Europe traffic.
- Why it works: Although it adds 10-14 days to sailing time, operational stability compared to the chronic instability of the Middle East is a key logistical advantage. Returning via Suez should only be considered when the insurance market demonstrates proven and sustained normalization, which will tangibly reduce operating costs and risk.
- Assessing the Panama Route in the Face of Instability:
- What to do: For your Transpacific East (TPEB) cargo, capitalize on the operational stability of the Panama Canal. The canal has maintained its maximum draft of 50 feet, eliminating the critical water restrictions of previous years.
- Why it works: In a world where the Red Sea is volatile, having a predictable alternative route that is not dependent on Middle Eastern geopolitics is critical to risk management and the reliability of your supply chain.
The variable cost trap: beyond the base price
Although base freight rates fall, variable costs and service quality remain pain points for the shipper, eating away at the margin.
Overcharges and lack of service
Indirect costs continue to rise. The Fuel Surcharge (BFS) has increased from 5.4% to 6.9% as of December 2025. Furthermore, the overall service reliability (with only 61.4% reliability) imposes a high non-monetary cost in the form of transit time volatility.
Carriers are trying to offset the drop in spot rates with adjustments to surcharges to maintain their profit margins. The BFS increase is due to fluctuations in crude oil prices. The service reliability is a consequence of extended routes and constant rescheduling. For you, as a shipper in Spain, this means that the 25% drop in the base rate can be misleading if the increased surcharges and logistical delays erode your margin. We need to look at the total cost.
Total cost audit
Don’t settle for a low base price. You must audit the total cost of your logistics to avoid the hidden cost trap.
- Proactive Surcharge Negotiation:
- What to do: Demand full visibility and transparency on all surcharges, such as the Bunker Fuel Surcharge (BFS) and the Peak Season Surcharge (PSS). On routes where there is no real peak season demand (as evidenced by the postponement of the Transpacific PSS until January 2026), you should challenge the application of any seasonal surcharges.
- Why it works: Surcharges are a key revenue stream for carriers in a weak market. By forcing transparency and challenging those not justified by actual demand, you ensure that the benefit of falling rates is passed on to you.
- Focus on Total Supply Chain Costs:
- What to do: Instead of focusing solely on ocean freight, calculate the total logistics cost, including the impact of low reliability (extra inventory costs, late delivery penalties). Prioritize choosing carriers and freight forwarders with a proven track record of above-average reliability, even if their base price is slightly higher.
- Why it works: A 5% cheaper freight rate that arrives three weeks late can end up costing significantly more than a more expensive rate that meets transit times. In an overcapacity market, efficiency and reliability become the true differentiators of value.
