Israel-Iran conflict: safety and stability of ocean supply chains under threat - Xeneta Chief Analyst

Peter Sand, Xeneta Chief Analyst:

“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.

“Any closure of the Strait of Hormuz would see services re-routed, 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.

“This escalation also makes a largescale 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 18 months after Iran-backed Houthi Militia in Yemen began attacking vessels in the region.

“Average spot rates from Far East to North Europe are up 62% 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 165%.”