Key insights:

1 Iranian attacks on ships have effectively closed the Strait of Hormuz since Sunday; Trump has pledged naval escorts and insurance support for oil tankers, though experts question both feasibility and timeline.

2. Major container carriers have suspended or restricted bookings to and from Persian Gulf ports, with Hapag-Lloyd and MSC halting bookings in both directions (including Oman and UAE ports on the Gulf of Oman side), CMA CGM suspending Persian Gulf bookings, and Maersk pausing reefer bookings regionwide and India - Gulf shipments, while still accepting general cargo from the Far East, possibly reflecting optimism about a near-term reopening.

3. Container impacts remain mostly local for now, with gulf-bound cargo piling up and threatening yard congestion in India; diverted in-transit containers will start being offloaded at Singapore, Malaysia and Sri Lanka transhipment hubs, though lower volumes and greater port capacity than in early 2024 should limit congestion severity compared to the start of the Red Sea crisis.

4. The Strait of Hormuz handles 2-3% of global container volumes, and the roughly 100 container vessels stranded in the Persian Gulf represent about 1% of effective capacity; but the longer these vessels and equipment remain out of circulation, the more likely capacity and equipment shortages will be felt at Far East origins, with vessel bunching upon resumption an additional disruptive factor.

5. The disruptions have not impacted rates on the main east-west trades where prices have remained unchanged since last week. But for directly impacted containers rates are climbing: CMA CGM has introduced a $3,000/FEU emergency surcharge for gulf-bound cargo and Freightos Terminal Shanghai-Jebel Ali rates doubled to over $4,000/FEU by Tuesday; climbing fuel costs combined with capacity and equipment constraints could extend rate hikes to non-gulf lanes if the conflict stretches on.

6. The Houthis have threatened to resume Red Sea attacks in response to the Iran strikes, prompting carriers who had recently resumed some Red Sea sailings to divert back around the Cape of Good Hope, potentially pushing a full Red Sea return further off than previously anticipated.

7. Air cargo faces more immediate and significant disruption: Gulf carrier hubs in Dubai, Abu Dhabi, Bahrain and Kuwait have been struck and airports remain closed, grounding aircraft from Emirates SkyCargo and Qatar Airways — two of the three largest cargo carriers by capacity — which together with Etihad represent about 13% of global air cargo capacity. These carriers’ hubs are a major connection point for a lot of global east-west cargo, and provide roughly a quarter of all China-Europe capacity.

8. Forwarders are already chartering direct Far East-West flights to compensate for lost capacity, with Kuehne + Nagel warning that backlogs of Europe and US-bound cargo in Asia could begin stacking up by end of the week; Freightos Air Index shows SEA-Europe rates up more than 6% to $3.82/kg since Friday, South Asia rates up 3% to Europe and 5% to the US, Middle East-Europe up 8% to $1.62/kg, and China-US up 15% to $6.90/kg, though some of the transpacific increase may reflect the post-LNY rebound rather than war disruptions alone.

Ocean rates - Freightos Baltic Index:

• Asia-US West Coast prices (FBX01 Weekly) stayed level at $1,843/FEU.

• Asia-US East Coast prices (FBX03 Weekly) stayed level at $3,022/FEU.

• Asia-N. Europe prices (FBX11 Weekly) decreased 1% to $2,460/FEU.

• Asia-Mediterranean prices (FBX13 Weekly) decreased 2% $3,649/FEU.

Air rates - Freightos Air index:

• China - N. America weekly prices increased 2% to $6.39/kg.

• China - N. Europe weekly prices increased 7% to $3.49/kg.

• N. Europe - N. America weekly prices increased 3% to $2.74/kg.

Analysis

The US-Israel strikes on Iran and subsequent Iranian retaliation targeting multiple countries in the area since the weekend are driving significant logistics disruptions in the region which could start to be felt more broadly if the conflict stretches on.

Six tanker vessels in or near the Strait of Hormuz came under attack early this week. The strikes de facto closed the waterway by Sunday, though the IRGC only made an official announcement on Monday. President Trump – who also said the US will cut off trade with Spain in response to being denied access to military bases there – stated on social media that the US would facilitate insurance and naval escorts to keep oil tankers moving through the strait, though experts are skeptical of the feasibility of and speed at which these could be provided.

In terms of container shipping, DP World suspended operations at the major container port of Jebel Ali in Dubai, the largest port in the Middle East, after an aerial interception caused a fire there Saturday night but reopened on Monday. Otherwise, ports remain operational, but with the strait closed and the security risks in the region, the major container carriers are diverting vessels away, cancelling sailings and suspending new bookings.

Hapag-Lloyd and MSC suspended bookings out of Persian Gulf ports and from all origins to these ports – including Oman and UAE ports on the Gulf of Oman side of the strait because of their proximity. CMA-CGM stopped accepting all bookings to and from Persian Gulf ports only. Maersk suspended all new reefer bookings to the entire region, and bookings out of India to the gulf because of the short lead time. But for now Maersk is still accepting general bookings from the Far East, possibly reflecting optimism that the Strait of Hormuz could reopen relatively soon.

These moves mean delays of uncertain duration for shippers to and from the gulf area. The canceled sailings mean gulf-bound containers are already starting to pile up and threaten container yard congestion in India. They could likewise lead to some backlogs at Far East origins that may start to be felt by other shippers out of those ports if the shutdown lengthens.

Carriers still sailing to the region are diverting containers already in-transit to alternatives in the area with most volumes likely to be offloaded at the major Far East transhipment hubs in Singapore, Malaysia and Sri Lanka. A similar shift to transshipment in the early months of the Red Sea crisis led to significant congestion at these ports in 2024, but with lower volumes and more port capacity this time, congestion should not be as severe.

So for now, the war’s impacts on the container market are mostly local, with Hapag-Lloyd reporting that elsewhere operations continue as normal. But the longer the conflict continues the more disruptive it will be and the more broadly it will be felt.

The Strait of Hormuz handles about 2% or 3% of global container volumes, and estimates of the amount of container capacity from the around 100 container vessels now stranded in the Persian Gulf range from less than or around 1% to as much as 10% of effective capacity. Analysts agree though, that the longer these vessels and equipment are out of circulation, the more likely that reduction will be felt in terms of available capacity and equipment out of the Far East. When traffic through the strait resumes, there will likely be some vessel bunching at these ports too, as ships arrive off schedule. Taken together with climbing fuel costs, these factors could start pushing rates up on non-gulf lanes.

So far rates are only going up for containers directly impacted by the closure. CMA CGM introduced a $3,000/FEU emergency surcharge for containers heading to the gulf, and other carriers are also applying fees for diverted bookings. Freightos Terminal container rates for Shanghai to Jebel Ali in Dubai spiked from $1,800 per 40' container on Saturday to more than $4,000/FEU by Tuesday likely reflecting these surcharges. On the main east-west trades though, rates were stable last week as the Lunar New Year holiday period is still approaching its end, and prices have remained level so far this week too.

War impacts are also reaching the Red Sea. The Houthis – who’ve paused attacks on Red Sea vessels since October – have threatened to resume strikes, though none have been reported yet. In response, the few carriers who had resumed some Red Sea sailings have diverted these vessels back around the Cape of Good Hope until further notice, possibly pushing a full Red Sea return farther off once again.

The crisis may have bigger and more immediate impacts for air cargo. The IRGC has targeted airports in Abu Dhabi, Bahrain, Kuwait and Dubai, with airports and airspace still closed. These closures are directly impacting shippers of volumes to and from the region.

But gulf carriers Qatar Airways and Emirates Skycargo are two of the top three largest cargo carriers by capacity, and together with Etihad make up about 13% of global capacity. Their hubs serve as a major east-west connection point, making up, for example, about a quarter of all China - Europe capacity according to Aevean.

With these carriers’ flights cancelled, many of their aircraft grounded and their hubs inaccessible, global capacity has dipped over the last few days, though there are also signs that direct Asia - Europe capacity has increased in response. South and South East Asian air exports are also heavily dependent on transit through the Middle East for movements west and there are already reports of shippers on these lanes facing disruptions, delays and scrambling for alternatives.

Kuehne + Nagel says forwarders are starting to charter direct Far East - West flights to make up for the missing capacity and that it expect backlogs of Europe and US-bound cargo in Asia to begin stacking up by the end of the week, creating a backlog that could cause delays and push up prices.

Climbing rates on some lanes may already reflect the war disruptions and blow to available capacity. Freightos Air Index data show rates from South East Asia to Europe have climbed more than 6% to $3.82/kg since Friday, with South Asia rates up 3% to Europe and 5% to the US. Middle East - Europe prices are up 8% to $1.62/kg and China -US prices are up 15% to $6.90/kg, though rates had begun increasing before the start of the war, possibly due to the start of some post-LNY bump.