The Strait of Hormuz serves as a vital global chokepoint for oil, gas, and cargo, linking the Persian Gulf with the Arabian Sea. Due to the recent resumption of hostilities between the United States and Iran, shipping companies, insurers, and cargo owners are currently reassessing the operational risks of navigating this key waterway.
Recent Developments
The position is now considerably more serious than it appeared only a few weeks ago. Tanker traffic through the strait has fallen sharply, commercial vessels have reportedly been struck, and the possibility of further escalation is affecting oil prices and financial markets.
The latest disruption has already reduced commercial activity through the waterway. Before the conflict, more than 100 vessels were reportedly crossing the strait each day. Following the renewed escalation, that number fell dramatically, with one report indicating that only around a dozen ships crossed on a recent Sunday.
What has happened to freight rates?
The clearest evidence of the conflict’s commercial impact can be seen in actual freight prices.
During the conflict, container shipping rates from Shanghai to Jebel Ali rose by more than 300 per cent, increasing from under $2,000 before the war to over $8,000 per container. Additionally, capacity and routing struggles drove some China-related container rates close to $9,000 during June.
The effect has not been limited to Gulf-bound container cargo. Reuters reported that container freight rates from Asia to the United States had approximately doubled since the conflict began, while bunker fuel costs had risen by around 55 per cent. (Reuters)
Air freight has also come under pressure. In the opening phase of the war, Southeast Asia–Europe air freight rates rose by more than 6 per cent, reaching approximately $3.82 per kilogramme, as airspace restrictions, reduced Gulf carrier capacity and additional demand placed pressure on the market. (Freightos)
Increased fuel expenses impact nearly all major ocean trade routes, forcing carriers to absorb the costs or implement higher base rates and surcharges. Although these numbers are not permanent tariffs, they illustrate the rapid fluctuations in freight costs when security threats, rising fuel prices, and capacity shortages coincide.
What has happened to transit times?
Transit-time increases depend on the route and the alternative available.
Avoiding the Strait of Hormuz for cargo already inside the Gulf is difficult due to the lack of an alternative maritime exit. Shipments may require transfer through alternative ports and movement by road, air, or multimodal services, adding several stages to a normally direct sea voyage.
Port congestion is a major issue. Earlier disruptions led to seven-to-ten-day waits at some UAE ports due to vessel bunching, cargo diversions, road transport shortages, and terminal capacity pressure. Additionally, diverting Asia–Europe cargo around the Cape of Good Hope adds 10 to 14 days of sailing time, depending on origin, destination, vessel speed, and congestion.
Rail alternatives offer substantial time savings: the Middle Corridor via Kazakhstan and the Caspian Sea offers China–Europe transit in 15–18 days, compared to 45–60 days for ocean services. However, rail and multimodal capacity is limited and cannot absorb the full volume normally carried by sea.
Air freight remains faster, but airspace closures and longer flight paths can increase flying time and reduce payload efficiency. Gulf cargo capacity was also heavily constrained earlier in the conflict. (Freightos)
Actual delays often exceed scheduled port-to-port transit times due to missed connections, port omissions, equipment shortages, and transshipment disruptions. Consequently, shippers must allow extra buffer for bookings, equipment, transshipment, port congestion, and customs at alternative gateways.
Insurance and additional surcharges
The increase in freight rates is only one part of the cost.
At the height of the conflict, premiums peaked at an estimated 5 per cent, a twenty-fold increase. For a $100 million vessel, this significantly raised costs from approximately $250,000 pre-conflict to as much as $5 million under severe wartime conditions.
Shipping lines may also introduce:
War-risk surcharges.
Emergency operational surcharges.
Congestion charges.
Fuel or bunker adjustments.
Security fees.
Port omission or diversion costs.
Since these additional charges can be introduced after a quotation is issued, importers and exporters should carefully verify validity and confirm which surcharges are included, excluded, or subject to change.
How businesses are responding
Many importers are reviewing contingency plans rather than waiting for events to settle.
Some are increasing safety stock, bringing orders forward or dividing shipments between different carriers and transport modes. Others are exploring alternative ports, road corridors and rail connections, particularly for time-sensitive cargo.
Chinese traders and logistics firms have increasingly considered land and rail alternatives through Central Asia, although these services remain constrained by capacity, border formalities and higher costs.
The present situation reinforces an important commercial lesson: resilience is no longer simply about finding the cheapest freight rate. It is about maintaining credible alternatives when the cheapest route becomes unavailable.
Read more about what these changes mean for the Freight Industry.
Looking Ahead
For the industry, this is a period when professional judgement matters more than simply offering the cheapest quotation. Forwarders that can interpret events, secure alternatives and communicate risk honestly will become more valuable to their customers. Those who continue to sell freight as a fixed-price commodity may find themselves exposed to losses and service failures.
