News / Protests in Iran may hinder or help shipping's return to the Red Sea

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Container shipping has yet another flashpoint to contend with, after civil protests across Iran led to a flurry of tit-for-tat threats from Washington and Tehran over the weekend – although this could expedite a return to Red Sea services.

President Trump weighed in and warned Iran that lethal force against the “peaceful protests” would be met by a US military response. This provoked a reciprocal threat to regional US and Israeli shipping interests and military bases, from Iran’s parliament speaker, Mohammad Baqer Qalibaf.

Precisely how substantive the impact on container shipping would be is an unknown at this point, but Freightos’s head of research, Judah Levine, downplayed the threat from Tehran.

Pointing out Iran was itself highly reliant on the Strait of Hormuz for oil exports, he suggested the government in Tehran may “hesitate” to impose a full blockade on the waterway and limit the threat to container shipping.

Mr Levine added: “Only 2%-3% of global container volumes transit the Strait of Hormuz, according to Container Trade Statistics. That means any disruption would be felt primarily at a regional level, rather than across the global container market.”

However, if it did opt for a full blockade, Mr Levine pointed out, Iran would “effectively” be cutting access to Jebel Ali, “the region’s most important ocean transshipment hub”, linking Asia to western markets by both ocean and air.

Were this to happen, Mr Levine continued, “ocean transhipments would likely be rerouted through South Asian hubs, introducing temporary congestion and upward rate pressure but stopping short of a systemic shock”.

But other voices in the shipping sector have expressed concern over the potential for regional delays and congestion, leading to a knock-on impact on global pricing and capacity; but for Vespucci Maritime CEO Lars Jensen, the protests across the country may prove pivotal.

Reports have described them as “the biggest in years”, but they have yet to reach the level of protest that rocked the country in 2022, and Mr Jensen added that the government had managed to quell protests before.

He said: “We do not know if these will lead to change or not. But if they actually result in a regime change, this is also important for container shipping. A regime change could remove the support for the Houthis, paving a swifter path to normalisation using the Suez route.

“In addition, this could end the sanctions on the country, opening a path for many more container lines to tap into the market of 90 million people with direct services. We saw the same in 2016, when sanctions were lifted for a brief window.”

All of this comes as carriers have begun testing the water for a Red Sea return, with Maersk waiving its Red Sea transit disruption fee on a service that travelled through the waterway shortly before Christmas.

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