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Economy6d ago

After Iran war upheaval, global shipping eyes return to status quo

Bell summary

Global shipping has experienced significant disruption from the US-Israel conflict with Iran since late February, including vessel attacks and cost increases. Industry analysts expect shipping to largely return to pre-conflict operations despite temporary supply chain disruptions, as container shipping has alternative routes unavailable to oil tankers dependent on the Strait of Hormuz.

The full story

The shipping industry has endured substantial operational challenges following the outbreak of conflict between the United States and Israel against Iran in late February. Merchant vessels have faced direct attacks, experienced extended delays, and incurred elevated operating expenses. Despite over four months of industry turbulence, analysts anticipate that shipping operations will ultimately revert to historical patterns with minimal structural change.

While shipping companies are expected to incorporate risk assessments more explicitly into cost calculations and pursue supply chain diversification where feasible, the fundamental necessity of maritime commerce suggests the industry will continue functioning largely as before over the long term. Container shipping, which handles diverse cargo ranging from agricultural products to consumer electronics, maintains advantages over oil and gas tanker operations in managing regional disruptions.

Unlike petroleum transport, which relies heavily on the Strait of Hormuz to access Gulf oil-producing nations, container shipping firms possess the flexibility to redirect vessels along extended alternative routes to circumvent regional conflicts and attacks by Iran-aligned Houthi forces in the Red Sea. The shipping sector has historically demonstrated resilience during crises, recovering from major disruptions with notable speed. During the initial COVID-19 pandemic year in 2020, global container shipping volumes declined by only 1.2 percent, and by January 2021, port cargo volumes had already exceeded pre-pandemic levels by 6.4 percent year-on-year.

Following the June 17 memorandum of understanding between Washington and Tehran regarding conflict resolution, shipping companies have rapidly expanded capacity. Container capacity in the region, which had plummeted from 3.2 million TEU to 74,000 TEU by mid-June, has rebounded to pre-conflict levels on certain routes. Capacity between Asia and the United States West Coast recently surpassed pre-conflict records, reaching 350,000 TEU according to freight analytics platform Xeneta.

Mentioned in this story
MaerskHapag-LloydBaltic and International Maritime CouncilInstitute of Shipping Economics and LogisticsXeneta

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Written by Bell Data Intelligence · based on reporting by Al Jazeera.Read the original ↗
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