Strait of Hormuz blockage, an “unprecedented freeze” on global maritime trade

Paris (France) - The blockage of the Strait of Hormuz constitutes an “unprecedented freeze” on global maritime trade, affecting everything from cosmetics and food products to pharmaceuticals, cars and precious marbles. While it primarily impacts petroleum products, it also threatens many other industrial sectors.

Importance of the Strait of Hormuz for global goods trade

This route primarily facilitates the export of oil and gas products from Gulf countries. The strait is a key transit point for the oil trade. A quarter of the world's oil and a fifth of its liquefied natural gas pass through it.

Access to the Strait of Hormuz is not essential for the major Asia-Europe route. Analysts point out that the path ends in a cul-de-sac near Kuwait, Iraq and Iran.

Passage through the strait is, however, essential for regional trade. It allows goods to reach the port of Dubai, Jebel Ali, the world's 10th largest container port and a redistribution hub for more than a dozen countries in the region.

At Jebel Ali, container ships are unloaded onto smaller vessels destined for countries from East Africa to India. This is according to Anne-Sophie Fribourg, vice president of the TLF union. The union represents all freight forwarders in France, who act as intermediaries between exporters/importers and shipowners.

Previous closures of the strait to maritime traffic

There has never been a closure. Several experts point out that even during the Gulf War, “there was never a total halt to trade” via the Strait of Hormuz. During the Iran-Iraq war between 1980 and 1988, there were attacks on oil tankers, but commercial passage was maintained, notes Paul Tourret. Tourret is the director of the French Higher Institute of Maritime Economics.

The current “freeze” on transit in Hormuz is “unprecedented,” adds Cyrille Poirier-Coutansais. Poirier-Coutansais is the director of the research department at the Centre for Strategic Studies of the Navy in France.

Since the start of the strikes on Iran, the largest shipowners have ordered their ships to stop moving and take shelter. These include the Italian-Swiss MSC; the Danish Maersk; the French CMA CGM; the German Hapag Lloyd; and the Chinese Cosco.

The Marine Traffic map, which tracks the routes and progress of ships worldwide, shows “groups of ships” at a standstill. These are mostly oil tankers, located in the far north near Kuwait and also near Dubai. The Iranian merchant fleet is also present in front of the Iranian port of Bandar Abbas on the other side of the strait.

Several other distinct groups of stationary ships are visible just before the entrance to the Strait of Hormuz, details Tourret.

Goods passing through Hormuz

Goods include cars, machinery and industrial products from Germany. France mainly exports cereals and agricultural products; cosmetics; luxury goods; and pharmaceuticals. Italy exports agri-food products, a lot of marble and ceramics, and the Netherlands also exports agri-food products, points out Fribourg of TLF.

In terms of exports, besides oil and gas products which are used to make fertilisers and plastics, the Middle East accounts for 9 percent of global primary aluminium production. According to TD Commodities, almost all of this is exported.

Impact of route changes on transport times and costs

Several e-commerce platforms have warned their customers that delivery times will be longer. According to Bloomberg, this ranges from a few days for Temu and Shein to around ten days for Amazon.

Freight prices are already increasing, particularly due to surcharges imposed by shipowners for deliveries in the region.

For the Europe-Asia route, ships are also no longer using the passage through the Red Sea and the Suez Canal. This is due to fears related to the resumption of attacks by Houthis, who are allies of Iran. It takes about ten more days at sea to go around the Cape of Good Hope at the tip of South Africa, with an additional cost of around 30 percent.

This article was translated to English using an AI tool.

OR CONTINUE WITH

Logistics

Middle East

Supply Chain