The conflict between Israel and Iran poses a threat to the safety and stability of ocean supply chains, warns ocean and air freight rate and market intelligence provider Xeneta. Possible consequences include more rerouting, port congestion, higher shipping rates and higher oil prices.
‘Geo-politics is once again threatening the safety and stability of global supply chains so we must hope for de-escalation in the conflict between Israel and Iran, with concerns it could see a de-facto closure of the Strait of Hormuz – a vital entry point for container ships calling at ports such as Jebel Ali and the wider Arabian Gulf region,’ explains Peter Sand, Xeneta Chief Analyst.
He adds: ‘Any closure of the Strait of Hormuz would see services rerouted, with increased reliance on India West Coast ports for connecting the Far East to Indian sub-continent. The inevitable disruption and port congestion, as well as the potential for higher oil prices, would cause a spike in ocean freight container shipping rates, with carriers likely also pushing for a “security surcharge” on these trades in the coming days.’
Also read: ‘Return to Red Sea could cause collapse in freight rates’
Spot rates up since Red Sea disruption
‘This escalation also makes a large-scale return of container ships to the Red Sea seem less likely, a situation which continues to have a major impact on ocean container shipping rates eighteen months after Iran-backed Houthi Militia in Yemen began attacking vessels in the region,’ states Sand.
Sand concludes: ‘Average spot rates from Far East to North Europe are up 62 per cent since 1 December 2023, just before escalation in the Red Sea, while average spot rates to US East Coast – another trade that would ordinarily transit the Suez Canal – are up 16 per cent.’
Also read: ‘US tariffs to shake up trade, no rate hike expected’
