Prolonged Hormuz Blockade Triggers Overland Logistics Crisis... Shipping Rates Hit Record High

Freight Rates Surpass COVID-19 Pandemic Levels
"Cargo Volume in the Gulf Region Down 60-80 Percent"

Following the outbreak of war between the United States and Israel and Iran, the continued blockade of the Strait of Hormuz has forced shipping companies to reluctantly divert cargo overland instead of using maritime routes, resulting in logistics costs soaring by as much as several thousand dollars, according to recent analysis.

On the 17th (local time), the Financial Times (FT), citing data from analytics provider Clarksons Research, reported that freight rates for shipping routes from Shanghai to the Gulf of Mexico and the Red Sea hit an all-time high last week.

Strait of Hormuz map. Photo by Reuters and Yonhap News Agency

The cost to transport a standard 20-foot container (TEU) on those routes surged from $980 (about 1.48 million won) before the outbreak of the Iran war to $4,131 (about 6.23 million won) last week. This figure surpasses even the peak of $3,960 per TEU recorded during the COVID-19 pandemic.

This increase in transportation costs is attributed to both rising fuel prices caused by the blockade of the Strait of Hormuz and the shift to more overland transport. According to Bloomberg, most commercial vessels have ceased operating through the Strait of Hormuz, with only limited movement observed for some Iran-related ships. Bloomberg’s tracking data shows that on the 16th, approximately 10 vessels—including three bulk carriers and one Iran-related oil product tanker—passed through the strait. On the morning of the 17th, no vessels were observed passing through. In addition, on the 16th, six Iran-related ships, including two oil tankers, entered the Persian Gulf.

The United States Central Command announced via social media on the 16th that since implementing the blockade measures against Iran, it has rerouted 78 merchant vessels.

Major global shipping companies—including MSC, Maersk, CMA CGM, and Hapag-Lloyd—have established truck transportation routes connecting ports along the Red Sea and Gulf of Oman, such as Yanbu and King Abdullah Port in Saudi Arabia and Fujairah Port in the UAE, to destinations including Dammam in Saudi Arabia, Basra in Iraq, and Jebel Ali Port in the UAE. However, trucking capacity remains limited.

Consequently, logistics in the Gulf region have plummeted, while both time and costs have surged. Rolf Habben Jansen, CEO of Hapag-Lloyd, stated in a recent podcast that cargo volumes to the Gulf region have decreased by 60 to 80 percent.

The consumer goods division of India’s Tata Group reported that cars, salt, and pulses bound for the Middle East are now being shipped to ports such as Jeddah in Saudi Arabia and Khor Fakkan in the UAE for overland transport. They estimate that the resulting delays could last up to 60 days.

Christian Bendel, President of fertilizer trading company Hexagon Group, explained that while fertilizer exports typically amount to 30,000 to 50,000 tons, a single truck can only carry 30 tons, meaning the route change poses significant logistical challenges. According to price information analysis firm Argus, Saudi companies are transporting urea cargo for fertilizer production by truck over distances of 14 to 15 hours, resulting in an estimated additional transportation cost of $80 to $90 per ton.

The prolonged blockade of the Strait of Hormuz is also impacting relief efforts. The United Nations World Food Programme (WFP) previously sent aid to Afghanistan via Iran before the war, but recently, shipments have been routed through nine countries—including Azerbaijan—starting from the United Arab Emirates, leading to a delay of 43 days compared to the original schedule.

This content was produced with the assistance of AI translation services.