Container Lines Adjust to New Risks in Strait of Hormuz and Red Sea
Following the exchange of attacks between Iran, its neighbors and American forces in the Mideast, ocean carriers are proceeding with caution. For safety, many have paused Hormuz transits for now. In addition to the risk to business operations and seafarers, there is an additional factor: War risk insurance increases are on the way for voyages through the Strait of Hormuz, and per-TEU pricing will have to adjust.
Hapag-Lloyd announced Sunday that it is imposing a war risk surcharge effective March 2 for cargo to and from the Persian Gulf. Prices for shippers will go up by $1,500 per TEU, or $3,500 per container for reefers and specialty cargoes. (Certain regulated shipments are exempt.)
MSC, the largest carrier, said that it was adjusting its network operations in the region for safety purposes. It has instructed all vessels currently within the Gulf or headed for it "to proceed to designated safe shelter areas until further notice." It has also temporarily suspended all cargo bookings for the region.
French carrier CMA CGM is also putting its Gulf operations on pause. In a statement, the line said that - like MSC - it is directing all vessels into the region to designated safety points.
For its part, number-two carrier Maersk said that it was suspending Strait of Hormuz transits indefinitely. "The safety of our crews, vessels and customers’ cargo remains our key priority. We are suspending all vessel crossings in the Strait of Hormuz until further notice," the number-two carrier said in a statement Sunday.
In addition to the conflict's effects on ships, ports in multiple Middle Eastern jurisdictions have had disruptions and closures of their own. The largest container port in the region, Jebel Ali, suffered a fire caused by falling drone debris from an Iranian attack; it temporarily shut down but has since resumed work at all four of its terminals, according to operator DP World.
In Bahrain, home of U.S. 5th Fleet, multiple drone strikes have prompted the authorities to close the seaport until further notice. Crew changes are also reportedly suspended for the time being, impeded in part by the shutdown of commercial aviation due to the closure of Bahrain's airspace.
Drones also hit the Omani port of Duqm, far from conflict zone and the Strait of Hormuz. The Arabian Sea port temporarily suspended operations following a strike by two drones; neither caused damage or injuries.
Red Sea disruption resumes
The leading Western ocean carriers have recently resumed operations through the Red Sea, after years of navigating around the Cape of Good Hope to avoid the risk imposed by Yemen's Houthi rebels. The Houthis have informed media that they plan to restart their Red Sea blockade in retaliation for U.S. attacks on Iran, so the Red Sea route may be offline once more.
The day before the U.S. strikes, Maersk announced the suspension of all Red Sea transits and the rerouting of vessels around the Cape of Good Hope - a major boost for its earnings prospects. If multiple carriers reroute around the Cape once more, instead of the much shorter Suez route, excess vessel capacity will be absorbed by the extra mileage per transit.
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CMA CGM followed suit on Saturday, suspending all Suez transits.
Maersk's stock rose 2.5 percent in early trading Monday morning, and Hapag-Lloyd - Maersk's alliance partner in the Gemini cooperation - rose by 5.5 percent.
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