Iran war hits shippers' bargaining position

Figure of the week

Only two vessels not connected to Iran or Russia have braved the Strait of Hormuz since President Donald Trump urged ships to transit the area on Friday, saying the US would provide insurance cover and an escort.

Quote of the week

“Iran has not closed the Strait of Hormuz. But it can be said the strait is not currently open, due to a collective societal awareness of geopolitical and macro-economic considerations.” Iran President Masoud Pezeshkian leaves analysts scratching heads after explaining the Strait of Hormuz is effectively closed without having been officially shut.

Iran war hits shippers’ bargaining position

Shippers’ hopes of gaining bargaining power throughout 2026 due to increasing container freight capacity have taken a blow from the conflict in the Middle East . Iran’s de facto closure of the Strait of Hormuz has sent carriers scrambling to secure tonnage, a ccording to consultancy Braemar. Before the Iran war, it looked like nothing could stop rates falling throughout the year as new capacity came to market. The possibility of a return to Suez Canal routings would have added even more capacity. With that, of course, would have come lower rates and increased bargaining power for shippers. Now those hopes appear to have evaporated. Vessels’ unwillingness to risk Iranian missile strikes in the Strait of Hormuz means they are having to take longer routings. “Ships spending an extra two weeks rounding the Cape of Good Hope are ships that aren’t available for shippers’ next bookings out of Shanghai or Ho Chi Minh City,” said Stephen Dyke, director of strategic solutions at FourKites. “We expect transit times on Trans-Pacific and Asia to Europe lanes to start creeping up within the next week or two, and we’ll be watching. “Carriers had just started moving services back through Suez, and that capacity was about to come back into the market. Now it’s gone again, and you’ve added Hormuz on top of it.” US shippers importing from Asia may well see reduced availability and increased lead times over the next two to four weeks, he warned. “A lot of US eastbound cargo from Asia routes through Suez. If that option stays offline, some of that freight shifts to Trans-Pacific routings through West Coast ports,” he added. “You start to see congestion build in ports like LA/Long Beach that have nothing to do with the Middle East.” So far, the capacity crunch has only been reflected in a slight uptick in container spot rates. Yet shippers face a new layer of uncertainty and potential volatility, Braemar said. Shippers’ hopes that 2026 would prove to be a year of calm after tumultuous 2025 are going up in smoke .

Air cargo shippers brace for fuel surcharges

US air freight shippers could soon be facing fuel surcharges due to rising oil costs as a result of war in the Middle East . China to US rates were up 15% week on week, according to Freightos. The increase, however was more likely to reflect surging demand post-Lunar New Year in China rather than supply chain disruption, it added. Middle Eastern hubs and surrounding airports are facing significant backlogs. These could take weeks to clear, said International Air Cargo Association director general Glyn Hughes. Airports in Dubai, Abu Dhabi and Qatar are all closed to commercial traffic. But while freighter and belly capacity has fallen by nearly 40% around the Middle East, US shippers face fewer direct impacts. US shippers without direct Gulf connections are likely to be able to escape the war risk surcharges airlines are planning to introduce on shipments routed through or near the conflict zone. However, depending on how high oil prices rise, US shippers may well start to face fuel surcharges over the next two weeks. Early this week, however, oil prices were swinging wildly. Gulf Arab states have begun to cut production due to the effective closure of the Strait of Hormuz. Only a handful of vessels have transited the strait since the US and Israel launched the attack on Iran. As a result, oil producing companies are running out of storage space. With such volatility in the market, it is hard for shippers to budget. But analysts are broadly united in predicting that oil prices could rise significantly if the conflict lasts for several weeks. That will mean significant fuel surcharges for air freight shippers, whether or not they have direct dealings with the Middle East .

Shippers will bear the brunt of rises in fuel prices

War in Iran will cause problems for shipping, but fall far short of the impact of the pandemic, a major industry analyst has said . Lars Jensen, CEO of Vespucci Maritime, told the Journal of Commerce’s TPM26 conference: “This is going to sound weird. Globally, strictly on container shipping, it’s a problem, but it’s not a major problem. It’s definitely not pandemic scale.” With many vessels still making diversions around the southern tip of Africa to avoid the Suez Canal, the effective closure of the Strait of Hormuz will have limited impact outside the Middle East, he said. Globally, “it will contract capacity some, but it’s not a major disaster for the countries in the Gulf.” Of course, the war has also put paid to any hopes shippers may have had that vessels would return to the Suez Canal in H2 2026. However, rising oil prices will impact container shipping costs. “On account of the Middle East, the carriers will go gangbusters in terms of implementing as many and as high surcharges as humanly possible, and not just on trades to and from the Gulf, but everywhere,” Jensen said. “They will be called emergency fuel surcharges, emergency conflict surcharges and whatever nice names, but they will be a reality. The only question is, how high will it go and how long will it last?” Congestion spreading from the Gulf will impact operations in Asia, leading to inevitable delays as well as surcharges , he added.

🤔 Did you know ?

With shippers still seeking clarity over if or how they can obtain tariff refunds, Wall Street has set up a new financial instrument to help shippers seeking tariff refunds - at a cost. Importers are still seeking clarity over the refunds of tariffs ruled illegal by the Supreme Court. Many are expecting a long wait. For now, hedge funds are offering to effectively buy the money due from refunds at a price of around 45 cents on the dollar. Shippers would then have the option of at least recouping some of the money they spent on tariffs rather than facing an indefinite wait.

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