The World’s Largest Container Carriers Are Rerouting Ships to Avoid the Persian Gulf as a Widening Military Conflict Pitting the USA-Israeli Alliance Against Iran Threatens to Disrupt Global Merchandise Trade

Freightwaves, Dubai, March 1

The United States and Israel launched attacks on Iran on Feb 28. Iran’s retaliation has targeted countries throughout the region, including US interests in the UAE, Qatar and Bahrain. The hostilities have also slowed the movement of ships, including those carrying oil and gas, in and out of the Strait of Hormuz amid warnings to avoid the narrow waterway.

While the strait has not been officially closed, several liners have suspended operations to the Persian Gulf and ordered their vessels to seek shelter. Hormuz is the gateway for Persian Gulf energy transport, with about 20% of the world’s crude oil supply passing through its waters.

Maersk, Hapag-Lloyd, CMA CGM and Mediterranean Shipping Co. suspended or shifted vessel services to the region. CMA CGM also announced an Emergency Conflict Surcharge of $2,000 for 20-foot, $3,000 per 40-foot and $4,000 per refrigerated container. The surcharge covers all Red Sea ports in Saudi Arabia, Egypt, Jordan, Djibouti, Sudan and Eritrea, as well as Persian Gulf destinations.

Hapag-Lloyd on March 1 announced a “war risk surcharge” of US$1,500 (S$1,900) per 20-ft container for deliveries in the region, effective March 2.

France’s CMA CGM told vessels in the Persian Gulf to take shelter immediately and suspended passage through the Suez. It imposed an “emergency conflict surcharge” of US$2,000 per 20-ft container for bookings in the region.

Japanese shipping companies also suspended operations in the Persian Gulf. Nippon Yusen KK temporarily halted its operated vessels from travelling through the Strait of Hormuz, said a spokesperson. Kawasaki Kisen Kaisha has instructed its ships in the Persian Gulf to remain on standby, while Mitsui O.S.K. Line ordered its vessels to wait in safe waters.

COSCO Shipping Holdings, the biggest Chinese carrier, said vessels that have already entered the Persian Gulf and completed operations “have been instructed to proceed to safe waters to hover or anchor”. COSCO said it is evaluating options, “including potential alternative discharge ports”.

In addition to avoiding Hormuz, Maersk and Hapag-Lloyd, in a vessel sharing alliance, said they are routing services away from the Suez Canal and sending vessels around the southern tip of Africa, after Houthi militants threatened to restart attacks on cargo ships in the Red Sea with ties to the US and Israel.

“ There is no viable alternative to getting containers in or out of ports such as Jebel Ali by ocean if the Persian Gulf is off limits,” said Xeneta analyst Peter Sand, in an email to FreightWaves. “Carriers will instead omit these calls on east-west services and drop boxes at a least-worst alternative port for onward transportation by road. This will cause severe disruption and port congestion at a regional level, but will not have a major impact on a global scale when compared to the seismic influence of conflict in the Red Sea.”