This article first appeared in The Edge Malaysia Weekly on March 2, 2026 - March 8, 2026

EXPORTERS and importers enjoying a respite from years of record high freight rates may continue to get a break in 2026, as fresh container ship capacity continues to flow into the market. Shipping executives believe rates will remain under pressure this year, with capacity still outstripping demand.

However, they warn that the fast-changing geopolitical landscape is creating new risks and challenges for an industry already juggling with ongoing rerouting around the Red Sea and the Suez Canal, exacerbated by volatile US tariff policies. US intervention in Venezuela and the possibility of a military strike against Iran have further deepened concerns among market participants over maritime safety.

Ocean freight rates soared to unprecedented levels in 2021 and early 2022, as pandemic-induced demand for goods, container shortages and congestion at major international ports combined to create a perfect storm in global trade. Prices spiked again in early 2024 following disruptions in the Red Sea.

Rates have since retreated sharply. The Drewry World Container Index, which tracks freight rates across eight major shipping routes, shows that the cost of shipping a 40ft container fell 38% to US$1,919 (RM7,455) in the week ended Feb 19, 2026, from US$3,095 a year earlier.

“Global freight rates have declined since last year, more significantly in container shipping, due to vessel oversupply,” says Dennis Ling Li Kuang, group managing director and executive director of Sarawak-based shipping firm Hubline Bhd (KL:HUBLINE).

“Dry bulk freight rates declined about 15% last year but have stabilised so far this year. Crude oil prices have risen 7.87% over the past month, potentially triggering some price increases,” he tells The Edge.

The Baltic Exchange’s dry bulk index, which tracks rates for ships transporting commodities such as coal and iron ore, has rebounded 105% year on year (y-o-y) to 2,129 points as at Feb 26.

Hubline’s vessel slots for the coming month are almost fully booked, reflecting steady regional demand. The company operates 21 tugs and barges, carrying cargo including coal, gypsum, palm kernel shells and scrap metal across key Southeast Asian trade lanes.

Booking patterns, however, have normalised from pandemic highs. During the Covid-19 disruption, customers typically secured slots one to two months in advance. Now, most book roughly a month ahead, Ling says.

Hubline swung to a net loss of RM18.74 million in the financial year ended Sept 30, 2025 (FY2025) from a net profit of RM3.23 million in the previous year, weighed down by a one-off RM10.65 million goodwill impairment tied to its flying academy operations.

Earnings were also hit by the strengthening of the ringgit against the US dollar. As most of Hubline’s shipping revenues are denominated in US dollars, the average exchange rate — which fell 6% to 4.3433 in 2025 from 4.6205 in 2024 — had a significant negative translation effect.

“About 60% of our operating expenses, such as bunker fuel and port charges, are in US dollars, while roughly 44% of our costs, including vessel maintenance, are in ringgit. There is some natural hedging, but it was insufficient to offset the losses in FY2025,” Ling says.

While the shipping division remained profitable in FY2025, the aviation segment recorded a loss. The group operates 28 fixed-wing aircraft and helicopters under its general aviation and flying academy services.

Ling says Hubline expects to return to profitability in FY2026, supported by improved performance in the aviation business.

Westports Holdings Bhd (KL:WPRTS) group managing director Datuk Eddie Lee Mun Tat expects Malaysia’s ports and logistics sector to remain resilient in 2026, supported by steady regional trade flows and firm container demand.

The port operator delivered another record performance for the recently concluded financial year ended Dec 31, 2025 (FY2025), with net profit rising 11.2% y-o-y to RM998.31 million, driven by higher revenue contributions across all segments.

Lee says the port’s performance is closely tied to global and Asian economic growth. Intra-Asia trade remained Westports’ largest segment, accounting for 66% of total throughput.

The International Monetary Fund projects global growth of 3.3% in 2026, with Asia forecast to expand 4.1%, providing a supportive backdrop for regional trade.

Malaysia’s trade data point to a strong start to the year. Total trade rose 12.6% y-o-y to RM272.37 billion in January, led by a 19.6% increase in exports amid sustained electrical and electronics (E&E) demand tied to the semiconductor upwards cycle. Imports grew 5.3%.

Against that backdrop, Westports is guiding for another record year in container volumes, targeting single-digit growth. The port handled 11.3 million 20-foot equivalent units (TEUs) in 2025, up 3% from the previous year.

Lee also says congestion that emerged between December 2025 and early January has since been resolved, with container yard utilisation now below 80% from a peak of 100%.

He attributes the congestion to an imbalance in vessel activity. In December, more containers were discharged than loaded, slowing yard operations and vessel turnaround times. The congestion at Westports was not isolated, with strong January volumes also reported by regional peers including the Port of Singapore, Port of Tanjung Pelepas and Northport. February volumes eased due to the extended Lunar New Year holidays in China.

To normalise operations, Westports reduced free storage days for laden containers to four from five, and for empty containers to three from five. The group is also expanding the terminal’s yard handling capacity by some 500,000 TEUs per year, with completion targeted by June.

“We are converting selected on-dock depot and container freight station areas into container yards to cater to future ‘vessel bunching’ and rising container volumes,” Lee says, adding that the bunching of ships at ports where multiple vessels arrive off-schedule has become the new norm.

Shipping executives increasingly see political instability as another challenge for the industry. Lee says the recent rejection by the US Supreme Court of President Donald Trump’s former global tariffs could spur some front-loading of exports to the US, as shippers rush to take advantage of a uniform 10% duty for 150 days, which Trump is working to raise to 15%, under an alternative legal framework that benefits some Asia-Pacific economies previously subject to steeper country-specific levies.

Still, he does not expect a repeat of earlier surges in pre-emptive shipments. “There may be some front-loading, but not on the same scale as before [in the first half of 2025, when expectations of the so-called US ‘Liberation Day’ tariffs led shippers to front-load goods to the US],” Lee says, noting that businesses have become more accustomed to policy shifts.

Shipping lines are also weighing a potential full return to the Red Sea route after attacks by Yemen-based Houthis since 2023 forced vessels to divert via the Cape of Good Hope, adding roughly 10 days to voyages and raising freight costs. About 7% of global tonnage is currently routed around the Cape of Good Hope, Lee says.

A large-scale return to the Red Sea could itself create temporary supply chain disruption, as vessel schedules readjust and bunching recurs at major ports. Some carriers have indicated a possible shift in the second half of 2026, though timelines remain uncertain.

To prepare, Westports is expanding yard capacity and procuring additional equipment, including rubber-tyred gantry cranes.

Lee also cites broader geopolitical tensions, including US military action in Venezuela and the prospect of a strike against Iran as risks to the global shipping industry. “These are factors we cannot control. What we can control is building capacity in the short term.”

Analysts expect Westports to deliver stronger y-o-y earnings in 2026, underpinned by record throughput and margin expansion from a three-phase tariff hike. Port tariffs rose 15% in July 2025, followed by a 10% increase on Jan 1, 2026, and a further 5% scheduled for Jan 1, 2027.

Lee says the adjustments are aimed at offsetting inflation, higher minimum wages over the past decade and heavy capital expenditure tied to the Westports 2 expansion. The project, which will add eight new berths from Container Terminals 10 to 17, is about 6% ahead of schedule in land reclamation and dredging works for CT10 and CT11, he adds.

In a Jan 30 report, RHB Research says 2026 should be favourable for logistics players, citing container volume normalisation following clearer reciprocal trade policies and resilient E&E exports.

However, the research house flagged continued pressure on freight forwarders’ margins as global freight rates remain 11% to 14% lower y-o-y as at October 2025. It also noted that major shipping lines are gradually resuming transits through the Suez Canal amid improved stability in the Red Sea, easing disruptions that have roiled global trade for two years.

Local integrated logistics service providers such as Tasco Bhd (KL:TASCO) and FM Global Logistics Holdings Bhd (KL:FM) saw y-o-y improvements in profitability during the pandemic as they rode the wave of rising container shipping rates.

In its Annual Report 2025, FM Global says the unprecedented revenue surge during the pandemic has since normalised, leading to steadier yet more competitive conditions.

It reported a record net profit of RM45.59 million for the financial year ended June 30, 2022 (FY2022), which declined to RM42.01 million in FY2023 and RM30.9 million in FY2024. Its net profit for 1HFY2026 rose 11% y-o-y to RM17.78 million.

After posting its highest ever earnings of RM90.82 million for the financial year ended March 31, 2023 (FY2023), Tasco’s net profit fell to RM61.74 million in FY2024 and RM26.2 million in FY2025. For 9MFY2026, its net profit slipped 1.6% y-o-y to RM28.92 million.

In an August 2025 interview with The Edge, Tasco group CEO Andy Lee Wan Kai said it would be difficult to replicate the performance seen during the Covid-19 years.

While global freight rate weakness remains a near-term headwind, analysts still favour Tasco for its diversified service offerings, exposure to resilient E&E exports and warehouse expansion. 

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