In light of recent developments in the Strait of Hormuz, Iran has indicated the possibility of allowing conditional safe transit for a limited period (approximately two weeks), subject to a pause in hostilities. While this is a positive signal, it should not be interpreted as a return to normal operating conditions.

Impact on Shipping

• Gradual resumption: A limited number of vessels may begin transiting on a trial basis; however, major carriers are expected to remain cautious and may delay full service resumption.
• Short timeframe: A two-week window is insufficient for liner schedules to normalize, and disruptions are likely to continue.
• Restricted conditions: Transit may require approvals and could be subject to limitations, impacting reliability.
• Market volatility: Freight rates, transit times, and routing options are expected to remain unstable in the short term.

   

Despite the recent ceasefire announcement, the potential "opening" of the Strait of Hormuz likely won't change the game for container shipping in the short term.

• Carriers are hesitant: Services won't restart until the security situation is 100% clarified.
• Vessel shifts: While some vessels are exiting the Gulf, we don't expect a surge of inbound container traffic through the Strait.
• Mixed Impact: While energy and bulk sectors might take the risk, container lines remain in a "cautious" mode.

Risks for Shipowners

• Security concerns: Ongoing risks from missiles, drones, and sea mines remain, despite temporary easing.
• Conditional access: Passage approvals may vary depending on vessel flag, ownership, and cargo type.
• Operational delays: Potential inspections, diversions, and other disruptions may occur during transit.

Insurance Considerations

• High premiums: War risk insurance costs remain elevated.
• Limited coverage: Some insurers may restrict or suspend coverage for Hormuz transits.
• Additional requirements: Advance notice, extra premiums, and compliance with specific routing/security measures may apply.
• Claims complexity: Any incidents may lead to complex and potentially disputed claims.

Airfreight Situation (Brief)

• UAE: Emirates, Etihad, and 7L operating with limited capacity; imports gradually improving. Freighter operations active from DXB/DWC/AUH.
• Saudi Arabia: Airports operational but constrained; DMM heavily disrupted. RUH/JED remain active.
• Qatar: Operational with limited capacity.
• Bahrain/Kuwait: Cargo operations suspended; routing via RUH/JED.
• Oman: Stable, though with reduced capacity.

Average Air Freight Rate Increase (to Middle East)

• Far East → Middle East:
  ↑ 30% – 50%
  Driven by capacity constraints, high demand, and partial shift from ocean to air.
• Europe → Middle East:
  ↑ 20% – 35%
  Moderate increase, supported by relatively stable connectivity but impacted by reduced capacity and fuel surcharges.
• Americas → Middle East:
  ↑ 25% – 45%
  Longer routes, higher fuel costs, and limited direct capacity contributing to rate pressure.

Ocean Freight Situation (Brief)

• UAE:
• Exports routed via Salalah / Sohar / Jeddah
• Imports routed via Khor Fakkan, with multimodal solutions to Jebel Ali, Abu Dhabi, and other GCC ports

• Regional Status:
• Bahrain ports closed (via Saudi land bridge)
• Qatar exports suspended; imports via Jeddah
• Kuwait partially reopening, but bookings remain restricted (via Jeddah)
• Iraq ports largely closed or operating with limitations

Average Freight Rate Increase (to Middle East)

• Far East → Middle East:
  ↑ 50-80%
  Driven by rerouting, congestion at transshipment hubs (e.g., Salalah, Jeddah), and equipment imbalance.
• Europe → Middle East:
  ↑ 40% – 50%
  Moderate impact due to shorter transit distances, but still affected by war risk premiums and schedule disruptions.
• Americas → Middle East:
  ↑ 40% – 50%
  Higher bunker costs, longer routing adjustments, and limited direct services contributing to increases.

Land Transport & Market Impact

• GCC land borders remain operational; however, increased volumes are causing congestion at customs, with 2–3 days delays expected.
• Strong demand is creating limited availability of trucking capacity across the GCC.
• Combined with geopolitical tensions and limited truck availability, overall freight rates have surged 50–60%+.

Fuel Price Market Impact

• Diesel: Prices have risen ~45–50%, significantly increasing trucking costs. Combined with geopolitical tensions and limited truck availability, overall freight rates have surged 50–60%+.
• Bunker (Marine Fuel): Prices have increased ~30–50%, contributing to overall sea freight rate hikes of 40%+.

  

  

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Outlook

While limited vessel movement may resume, most operators are expected to wait for more stable conditions before fully restoring services. As a result, supply chain disruptions, capacity constraints, and elevated costs are expected to persist in the near term.

CONTACT US

We will continue monitoring the situation closely and provide further updates as operational conditions evolve.

Please contact our experts for further advice. We will keep you closely informed.

   

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