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Shipping companies are struggling to reroute and land cargoes of fresh food and live animals stuck as the Middle East conflict disrupts trade and starts to cause congestion at ports outside the Gulf.
About 90 container ships are stuck in the Gulf out of a total of 425 that were due to cross the Strait of Hormuz when the vital trade artery was effectively shut by the conflict. Most have been left stranded or seeking other ports after transshipment hubs such as the Dubai port of Jebel Ali and Oman’s Salalah suspended operations due to strikes.
Many contain refrigerated food for Middle Eastern consumers. Four hold shipments of live animals destined for halal consumption, according to analysis by S&P Global.
Johan Sigsgaard, chief product officer for ocean products at Maersk, said the “first critical supply chain we need to deal with is refrigerated cargo because of the much shorter shelf life. Anywhere between the Gulf and going back to Latin America . . . we’re looking for storage options for these.”
More than 100 tankers are also stuck, adding to widespread fuel shortages.
Shipping executives are therefore seeking space in ports outside the region or trying to rapidly reroute ships.
Drone attacks on ports around the Gulf have meant that discharging cargo there was “off the cards”, said Peter Sand, chief analyst at shipping market tracker Xenata.
That puts pressure on ports much further away, with major transshipment hubs such as Singapore, Malaysia’s Tanjung Pelepas and Colombo in Sri Lanka, as well as Tangier and Algeciras in north Africa, most likely to be impacted, analysts and executives said.
“Everyone’s looking for space now. We believe that we are securing a fair bit of space and once that is done we will advise customers on how we will handle the cargo,” Hapag-Lloyd chief executive Rolf Habben Jansen told the FT.
Car carriers present a particular problem. About 15 car carriers are stranded while 20 are either waiting outside or on the way with cargo.
Lasse Kristoffersen, chief executive of Norway’s Wallenius Wilhelmsen, operator of the world’s biggest car carrier fleet, said ports that could manage the additional automotive cargo “will be well outside the region and could even be in east Asia”.
The need to bring operations under control has pushed some companies to drastic action.
MSC, the world’s largest shipping company, on Tuesday invoked conditions related to a 19th-century seafaring law known as the Bills of Lading Act to announce that all containers would be taken to the nearest available port and left for customers to collect at their own expense, plus an $800 fee “to cover deviation costs”.
As containers build up, these ports will come under even heavier pressure as the surplus causes efficiency to drop, leading to “ripple effects” throughout the system, Sand said.
Singapore, the world’s second-largest port after Shanghai, was already suffering congestion due to US tariffs and the rerouting of manufacturing out of China.
According to data from forwarding company Flexport, the number of days ships have had to wait to dock and unload in Singapore this week is 6.5 days, up from a year-to-date average of 2.9 days, leading to higher fuel burn on ships and vastly increased costs.
All of the major shipping lines said they had halted services through the Gulf and were no longer taking bookings for the region.
With Israel warning on Wednesday that it expected the war to continue for “several long weeks”, logistics executives are braced for containers and planes to be in the wrong places along normally finely tuned networks.
Oscar de Bok, chief executive of DHL Global Forwarding, DHL’s international freight arm, said the group was trying to find alternative routes for cargo and had chartered a fleet of “hundreds” of lorries to move shipments out of the region by land.
“To recover a week [of disruption] it will probably take four weeks. And if this is going to be four weeks, then we’re talking about months to be recovered,” he said.
Flexport said 13 per cent of global air cargo capacity was grounded. In many cases landing rights do not allow airlines to easily reroute planes and airports lack extra space to hold cargo planes that often carry perishable goods and critical healthcare products.
“It has a severe impact on the air cargo capacity and you will see that in higher prices,” said Sanne Manders, president of Flexport. Turkish Airlines would probably be “a big winner . . . because their [Istanbul] hub is not closed”.
Additional reporting by Harry Dempsey in Tokyo
