Ocean carriers are again avoiding the Red Sea and retreating from the Strait of Hormuz following a joint U.S. and Israeli military operation in Iran and the latter’s retaliatory attacks on neighboring Middle Eastern countries.
Container shipping firms, oil tankers and bulk carriers now must navigate a murky environment in which seafarer safety takes primary concern and insurance companies end war-risk coverage, resulting in higher surcharges for shippers.
According to data from maritime visibility platform Windward, traffic through the Strait of Hormuz dropped 81 percent below its seven-day average on Sunday. Maersk and Hapag-Lloyd were among those that suspended shipping through the chokepoint, which is known for being a major trade artery for oil and natural gas, likely causing delays for services calling ports in the Persian Gulf.
As of Monday, there were still 132 active container ships with a combined capacity 458,000 20-foot equivalent units (TEUs) in the Persian Gulf, accounting for 1.4 percent of the global fleet, according to data from container shipping market intelligence firm Linerlytica.
Linerlytica says 10 percent of the global container shipping fleet has routes that pass through the strait. Although Iran cannot officially close the strait, a prolonged disruption of the Hormuz would “lead to a reconfiguration of these services and result in a short-term tightening in vessel supply and box equipment as well as increased congestion at Asian ports,” Linerlytica said in a Monday update.
“We risk seeing Singapore, Tanjung Pelepas and Port Klang become transshipment bottlenecks for cargo which otherwise would be sent directly to the Gulf. It will result in rapidly rising spot rates for cargo to the Gulf area,” said Lars Jensen, CEO of container shipping consultancy Vespucci Maritime in a LinkedIn post Sunday. “In addition shippers should prepare for a ripple effect with rising spot rates on other major deep-sea trades as well.”
The growing conflict is also drawing concern on the other side of the Arabian Peninsula, scaring away carriers that had sought to make a more regular return to the Suez Canal.
Maersk, Hapag-Lloyd and CMA CGM have all opted to pull services sailing through the Red Sea in the wake of the U.S.-Israeli campaign, which resulted in the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.
No clear date has been set for a potential return.
“Any plans for a phased return of container shipping to the Red Sea in 2026 will be shelved until the security situation becomes clearer,” said Peter Sand, chief analyst at Xeneta, in a Saturday update.
For Maersk, all sailings on the MECL (Middle East-India to U.S. East Coast) service will be rerouted around the Cape of Good Hope. Maersk’s shared ME11/IMX (Middle East-India to Mediterranean Sea) service with Hapag-Lloyd is also reverting to the Africa route. That service line’s Maersk Hanoi vessel is currently in the Red Sea and expects to pass the Suez Canal on Tuesday.
Both companies say they would prioritize the trans-Suez route once the situation stabilizes and the security situation improves.
On Saturday, CMA CGM said all vessels inside and headed for the Persian Gulf had been instructed to proceed to shelter immediately. The French carrier had already rerouted three of its services traversing the Suez Canal back around the Cape of Good Hope due to the uncertainty in the region.
Three CMA CGM vessels, the Pegasus, the Vila Do Conde and the Antigone, are currently in the Red Sea. All three are either entering or leaving Saudi Arabia’s Port of Jeddah. Three other ships were routed away from the Red Sea’s chokepoint, the Bab-el Mandeb Strait.
Mediterranean Shipping Company (MSC) has suspended all bookings for worldwide cargo destined for the Middle East until further notice. Bookings to the region will resume as soon as the security situation improves, according to the world’s largest ocean carrier.
“As a precautionary measure, MSC has instructed all vessels currently operating in the Gulf region, as well as those en route to the area, to proceed to designated safe shelter areas until further notice,” MSC said in a statement.
The MSC suspension represents a total of 73,000 TEUs of weekly capacity across nine services into the Red Sea and Persian Gulf.
Similarly, Ocean Network Express (ONE) said it is temporarily halting new bookings for cargo moving to and from the Persian Gulf until further notice. For cargo currently in transit or planned shipments, the carrier is assessing the situation on a voyage-by-voyage basis.
Cosco Shipping and subsidiary Orient Overseas Container Line (OOCL), stopped short of leaving the region, but said vessels headed for the Persian Gulf have been notified to prioritize navigational safety.
In the wake of the American and Israeli offensive, two senior Houthi officials told the Associated Press Saturday that the Yemeni militant group would restart missile and drone operations against commercial shipping.
The Islamist organization is responsible for the Red Sea crisis, having begun their attacks in November 2023 after the start of the Israel-Hamas war in solidarity with Palestinians. The Houthis ended their campaign when Israel and Hamas came to a ceasefire last fall.
As the potential for more conflict in the Middle East intensifies, several marine insurers including Gard, Skuld and NorthStandard are cancelling their war-risk policies for ships entering the Persian Gulf starting Thursday.
High war-risk premiums elevated throughout the Red Sea crisis, and were a significant factor in warding off ships from passing through the Suez Canal.
These premiums, which had been around 0.25 percent of a vessel’s replacement value, could jump by anywhere been 50 and 100 percent due to impacts from the war, according to various estimates.
Ocean carriers are reacting in kind, passing off the war-risk premiums to their customers. Maersk is levying an emergency freight increase for all goods entering and existing the countries surrounding the Strait of Hormuz, with a $1,800 increase per TEU and a $3,000 bump per 40-foot container. The company has also implemented several emergency contingency surcharges on its Middle East Gulf and Indian subcontinent to North Europe and Mediterranean services effective March 15.
Hapag-Lloyd introduced several war-risk charges for cargo moving to and from areas of the Persian Gulf, while CMA CGM issued emergency conflict surcharges applied to cargo headed to and from various Middle Eastern countries encompassing both the Arabian Peninsula and Africa.
