As freight markets brace for another year of uncertainty, carriers and shippers alike are navigating volatile rates, shifting trade lanes and an uneven path back to normalcy.
To cut through the noise around what 2026 may hold—from Red Sea risks to mounting capacity and contract pressure—Sourcing Journal sat down with Peter Sand, chief analyst at Xeneta, who outlines where the ocean and air freight markets are headed and what matters most in the months ahead.
Sourcing Journal: What has been your reactions to the return of container ships to the Red Sea and the seeming stabilization there? How long could it still take to see any kind of normalize sailing cadence?
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The move by Maersk to reintroduce a service in the Red Sea probably surprised the most. If I dial back weeks, I’ve seen an elevated situation in the Middle East region that has probably been escalating.
The fact that CMA CGM decided to pull back some services on that risk was probably more in line with what I saw. It proves the point also that assessing risk in that region is tricky.
Long story short, we still anticipate that the return to Red Sea seems likely in 2026, but also more likely in the second half than the first half.
Three to five months is our take on a return timeline. This would include extensive short-term market rate volatility, and extended chaos around the ports in the Mediterranean Sea and North Europe.
SJ: How does this development impact freight rates? And how will carriers maneuver those changes?
PS: The ripple effect from the Red Sea diversions is all but gone in the long-term market for Far East to the U.S. East Coast transits, and had already been gone from the West Coast.
Carriers are clinging on to that premium into the Mediterranean and North Europe for as long as possible.
How do shippers react and respond to that when they do not know when the eventual return will happen? We advise them to ensure that they get the “Red Sea premium,”—the estimate of costs added on to carrier networks to reroute—separated in whichever contract they do.
Whether that’s $500 or $800, that kind of Red Sea premium will also evaporate, and carriers will look down at a challenge maintaining rates above a higher cost level.
Gemini Cooperation partners Maersk and Hapag-Lloyd’s underlying cost levels are some 20 percent above where they were just four to five years ago. If you add that kind of cost inflation, you don’t see that in the rates as of now.
That would probably be a stopping point for the carriers, when engaging in what could otherwise be a cutthroat price war in the short term, because they could easily eat into to a price level that would be below their costs.
Freight rates are coming down. In our 2026 Ocean Freight Outlook, we see long-term rates down 10 percent from baseline rates in last year’s third quarter, and we see average spot market rates declining 25 percent for the full year.
And that’s not accounting for an anticipated return to the Suez Canal. Anything that looks like a return to the Suez would be on top of that.
SJ: What should shippers consider when approaching this contract season?
PS: They will be looking to get something else, because they will not want to just fork profits to the carriers.
When shippers pay what we anticipate will be competitive prices across the board, they will reward the contracts to the carriers that could deliver something special to them. This could mean timely arrival in terms of schedule reliability, faster transit times or a service that doesn’t see sky-high cancelation rates.
All those soft elements of any contract will be a focal point for anyone seeking to sign contracts now. We know from having conversations with our customers right now, they hesitate signing contracts. They delay. They may extend existing contracts to the latest extent possible, simply to buy themselves more time. And they know the fundamentals of the market are working in their favor.
They also realize that the short-term market is spiking now, but that is not a reflection of the real underlying market. That’s more sentiment, whether it’s geopolitical situations going sour or whether it’s Lunar New Year. It doesn’t reflect where we see the contract rates being signed. They’re pretty calm in that negotiation room right now, not in a hurry.
SJ: Xeneta expects record orderbooks for new container ships. How does this flood of capacity impact the container market?
PS: Let me put it into perspective up front here: it’s more than 11 million TEUs. That’s roughly a third of the existing fleet. And if you were to neutralize the effect of the orderbook, you would have to basically demolish every single ship in the active fleet that was built in 2010 and before that.
That will pick up, but not to the extent that we will neutralize the inflow of tonnage going forward.
In 2026, we anticipate 3.3 percent of fleet growth, the lowest for a number of years. But we’re climbing another Mount Everest in 2027 and 2028 with higher fleet growth for those two years than what we see now, so carriers have their work cut out from them.
The only thing that matters is size. The downside of losing money, even in a longer downturn, is much smaller than the potential upside, as they have seen it during Covid and during the Red Sea crisis so they can endure couple of loss-making years if they are among some of the most profitable carriers.
SJ: We have completed the first year of Trump 2.0, with shifts in U.S. policy shifting global trade flows. What can we expect going ahead?
PS: It’s big, but mostly for U.S. importers. Not only do they have to pay the tariffs, but they also need to be able to diversify their suppliers.
We have seen the biggest exporter of all generalized goods, China, flex their muscles in the sense that finding buyers to their goods everywhere else in Europe, the Middle East, Africa and South America. That kind of trade flow change in such a short time didn’t take the Chinese exporters by surprise.
I think we will see more of the same in 2026, and we will see what has been established in 2025 continue.
We’re probably still going to see that Chinese exports to U.S. will still struggle to grow, or maybe they won’t grow at all. We will see Southeast Asia taking a bigger role again in exporting to the U.S.
Importers in in North America, particularly the U.S., have definitely tried to do what they can to supply and source their products from elsewhere. Despite this shift, you cannot just swap China out of sourcing.
One thing that will be interesting to watch will be Europe’s ability still to absorb so much demand, especially into the Mediterranean. We’ve seen almost 10 percent demand growth into the Mediterranean. Is that sustainable?
SJ: Xeneta is projecting dampened air freight growth in 2026. What is driving that projection?
PS: We see softer demand due to the headwinds from geopolitics. There is no longer a massive flow of e-commerce into North America and to some extent, Europe, due to the de minimis rules being changed.
That showed up in December with a contraction of Chinese e-commerce exports for the first time in years. While that followed up a massive December 2024, it still proved the point that we have passed peak on e-commerce.
Softer global expectations for global air cargo demand sit between 2 percent and 3 percent. If we assess that against capacity, we see capacity growth at 3 percent to 4 percent for air.
That’s what we see impacting rates, which we expect to be down 5 percent to 10 percent, very much driven by the e-commerce slowdown.
SJ: With slowed air freight demand and Red Sea normalization, how should shippers be approaching decisions on ocean vs. air?
PS: In terms of contracts, we expect both shippers and forwarders to be more flexible into grabbing this potential slide in the air freight market.
Both modes should experience some volatility, because when ocean carriers go back to the Red Sea, schedule reliability will probably hit rock bottom. If they can swap mode and bring necessities into the air away from the sea, that would give air freight sort of a boost. Air cargo will likely be reserved by many shippers to handle supply chain shocks rather than routine shipments.
On the other side, as ocean freight trade lanes through the Suez are reestablished, we will see that shippers also like the cost efficiency. They will also see shorter ocean transit times, and they would rather spend the money on floating inventories instead of flying goods around the globe.
I would watch out for an interim decline of schedule reliability that will give somewhat of a stronger sentiment and a warmer market for air freight as it happens.
