Impact of War Againt Iran on Cargo Shipments

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Part I - Transpacific Rates Trend & Market information

The escalating conflict following US-Israeli military action against Iran has thrown global shipping into turmoil, with two critical maritime chokepoints now effectively off-limits. The Strait of Hormuz was closed on March 1, with Iran vowing to strike any attempting vessels, trapping approximately 150 container vessels and tankers in the Persian Gulf . Simultaneously, the Houthis have announced the resumption of attacks on ships linked to US/UK/Israel, extinguishing any hope of a Red Sea recovery . Major carriers including MSC, Maersk, Hapag-Lloyd, and CMA CGM have suspended Middle East bookings, diverted all Red Sea vessels back to the Cape of Good Hope, and are imposing emergency war surcharges.

Impacts on Trans-pacific trade capacity

The suspension of operations at Jebel Ali Port, a key regional hub, may trigger port congestion. Major carriers are repositioning vessels and reassessing Middle East operations. Both the port congestion and vessel re-routing will absorb global fleet capacity, tightening capacity supply across the board, which is expected to spread to Transpacific trade as well.

Suggest to remind your customers of the potential space supply issue, try to get loading plan/volume forecast for the next 4 weeks, and confirm bookings at earlier time.

Impacts on Trans-pacific trade pricing, short term & long term

So far the conflict remains geographical and has no substantial impact on Transpacific trade. Carriers announced War Emergency Surcharge as high as $3,000 per FEU, which is right now only applied to Middle East origins. But of course, shipping lines will make full use of market sentiment to save the spot market from ongoing downward pressure.

Short term : MSC has raised USWC rate level from $1,900 to $2,400 per FEU towards March 14. Today, carriers announce new rate levels for the 2^nd half March - $4000 to USWC & $5,000 to USEC. But such a big rate increases are not expected to last for long time without effective volume recovery, and spot market may gradually drop back to current rate levels if the war doesn’t develop to worse situation.

Long term: Carriers attending TPM suddenly changed their tones today. The discussions about new contracts are frozen as they need time to review the market situation and have internal discussion before going on contract negotiation. It reflects a cautious, wait-and-see attitude to market uncertainties.