Iran conflict causes severe disruptions to global ocean freight and air cargo flows: Report

Escalating tensions around Iran are causing major disruptions to global ocean freight and air cargo networks, affecting the movement of critical goods worldwide. Industry experts warn that prolonged instability could trigger supply bottlenecks, higher freight costs and potential shortages across multiple sectors.

The escalation of conflict in Iran has triggered significant disruption to global ocean freight and air cargo supply chains, extending well beyond oil shipments. With cargo ships idling in the Gulf or rerouting around Africa, and planes grounded across key Middle Eastern hubs, the impact is rippling through the delivery of pharmaceuticals, semiconductors, fertilisers and other essential goods, news agency AP reported. Experts note that every day of continued instability increases the risk of shortages and price surges that could affect a broad spectrum of industries worldwide.

Shipping lines

Shipping lines and air carriers have responded to the closure of major transit points by altering routes and introducing new surcharges, further compounding delays and costs for shippers. Shipping company Maersk said in its latest operational update that it expects air freight rates to climb as capacity is squeezed. "Airlines are also introducing or reviewing the possibility of introducing war risk surcharges on shipments routed through or near the impacted regions," Maersk said in a statement. "There may also be added costs linked to jet fuel which in turn can push up costs."

Closure of airspace and airports

The closure of airspace and airports in countries such as the UAE, Qatar, Bahrain, Kuwait, Iraq and Iran has left tens of thousands of passengers and large volumes of cargo stranded. These airports serve as vital links not only for regional trade but also for international shipments from India and Asia to destinations across Europe and beyond. Goods typically transported by air, such as perishable produce, pharmaceuticals and electronics, account for about 35% of world trade value, despite representing less than 1% of total freight by volume, according to Boeing.

Bottlenecks

Bottlenecks are also visible at sea. Clarksons Research reports that about 3,200 ships, or 4% of global tonnage, are idle inside the Persian Gulf, while another 500 vessels are waiting outside Gulf ports. While the proportion may appear minor, Michael Goldman, North America general manager at CARU Containers, highlighted the network effect: "The supply chain is kind of like a long train with many cars and each car represents, let's say, a port in the world. Well, if one car gets derailed, it can very often have a domino effect to many other cars behind it or in front of it," he said. "So although we only have a small number of ports affected by this military action, it can really have a big effect on the total supply chain."

Critical commodities are caught in the disruption. Alongside oil, the Middle East is a key producer of petrochemical feedstocks and nitrogen fertiliser, while Indian pharmaceuticals and Asian semiconductors frequently transit these routes. Henry Harteveldt of Atmosphere Research Group notes, "Remember, there's a lot of pharmaceutical products that are made in India and then exported to different countries around the world. If that's disrupted, that has a huge, huge, huge impact."

Industry experts expect the crisis to drive further escalation in costs. In addition to new war risk surcharges, shippers are facing longer routes that add 10 to 14 days to voyages and roughly $1 million in extra fuel per ship, according to supply chain analyst Patrick Penfield. "This is really causing some major impacts within the global supply chain," said Patrick Penfield, professor of supply chain practice at Syracuse University. "As this conflict keeps progressing, you'll start to see some shortages, you'll see some major price increases."

Air cargo sector

The air cargo sector is under similar pressure. Maersk said in an operational update Tuesday that it expects air freight rates to rise due to capacity constraints. Emirates, Qatar Airways and Etihad Airways, which operate large cargo fleets, have been forced to ground planes or reroute flights, creating challenges for time-sensitive shipments. The situation is aggravated by the need for longer detours and additional fuel stops, particularly for flights connecting India and Asia to Europe.

Shippers are also introducing a range of surcharges for clients. With higher fuel prices, longer routes and increased risk in the region, shippers have begun adding fuel and 'war risk' or 'emergency conflict' surcharges to what they're charging clients, leading to higher costs all around, he said.

Despite the turmoil, some industry leaders argue that supply chains are becoming more adaptive. Michael Goldman pointed out, "The specific situation that's happening is pretty unprecedented, so it's very unique from that perspective," he said. "(But) for the last few years the industry just kind of runs on disruption. So in terms of our industry having disruption, that is nothing new. That's more of the same."