The ongoing conflict in Iran has forced carriers to divert vessels, pause transits and suspend bookings through the Strait of Hormuz, as ocean carriers and cargo owners deal with ballooning shipping costs and rapidly rising insurance premiums.
According to logistics software provider CargoWise, one in every three logistics organizations has reported ocean freight disruptions stemming from the situation in the Middle East, as well as four in every nine air freight providers. Marine Traffic also estimates that tanker transits through the Strait of Hormuz were down by 90% between February 25 and March 4, in the face of threats to commercial shipping from Iran.
"Commercial shipping is being advised to avoid the region and seek alternative routes," said law firm Kennedys in a March 5 analysis. "Where this is not possible, it appears that carriers are looking to terminate voyages and demanding that cargo owners either pay increased charges or find alternative methods of transportation."
Kennedys estimates that there are around 135,000 twenty-foot equivalent units worth of transit in the region, with an estimated cargo value of nearly $4 billion. Much of that cargo now faces an uncertain path forward, as carriers weigh whether to reroute vessels away from the strait, delay sailings altogether, or offload shipments at other ports outside the conflict zone. Kennedys also predicts that freight forwarders will likely soon receive a slew of voyage cancellation notices as well as surcharges from ocean lines, as carriers attempt to offset the higher costs of shipping in the region.
