Middle East Conflict: Global Logistics Summary

Its now approaching one month since the start of the Iranian conflict, disruptions to global logistics remain significant, particularly in regard to fuel costs and air freight capacity. Please see below a summary of the current situation.

Ocean Freight

Service

• Shipping activity to and from the Gulf has effectively halted.
• Some South Asia and Middle East ports have faced increased congestion.
• Asia – Europe routes are partially insulated, as many vessels had already been diverted via the Cape of Good Hope, avoiding the Middle East.

Rates

• Significant surcharges have been imposed on cargo linked to the Middle East.
• Fuel (bunker) costs are climbing steeply across all trade lanes.
• Base rates on Asia – Europe routes remain fairly steady, though carriers are attempting to implement General Rate Increases (GRIs).

Air Cargo

Service

• Commercial airspace is closed over Iran, Iraq, Syria, Israel, Bahrain, and Kuwait.
• The UAE and Qatar are experiencing strict airspace limitations, while Saudi Arabia and Oman have partial restrictions.
• Major Gulf hub airports, including Dubai, Doha, and Abu Dhabi, are heavily disrupted, resulting in reduced capacity, especially on Asia – Europe routes.
• Flight durations have increased due to rerouting.

Rates

• Fuel surcharges are rising across all routes.
• Asia – Europe pricing is surging.
• Global air freight rates are trending upward.
• Spot rates remain highly unstable.

Insurance

• War risk cover has been withdrawn for a number of Middle Eastern routes.
• Insurance is no longer available for vessels operating within the Gulf.
• Cargo insurance premiums are increasing.
• Definitions around war risk are currently under review.

Recommendation:

• We strongly advise reviewing your insurance policies, or talking to us about coverage, to ensure sufficient cargo insurance is in place under the current conditions.

As ever, Westbound is continuing to monitor developments. Should you need further information on specific shipments, then please do not hesitate to contact a member of the team.