News / DHL update on cargo flows as pressure builds in the strait 

In DHL’s latest Middle East ‘navigation disruption’ webinar with customers, Tobias Maier, DHL Global Forwarding, Freight’s CEO for the region (which includes Africa) and his senior team, provided an update on the impact of the conflict on supply chains.

Yesterday’s briefing was the 14th since the conflict began and, like the previous ones, was rich in first-hand accounts of the latest developments impacting freight flows.

Mr Maier began by highlighting the ‘relatively rough’ previous night the UAE had experienced – a reference to drone and missile attacks which had continued into the morning when a tanker vessel was hit 31 miles off the coast of Dubai, and another had been close to being attacked.

Nevertheless, the mood was decidedly stoic: amid the dangerous and chaotic backdrop of war, DHL is safeguarding network stability, supporting customers and ensuring the continuity of critical supply chains, he said. Mr Maier began with air, saying Gulf carriers are continuing their gradual recovery in light schedules and “operating on a pretty stable level. Emirates is around 60% of pre-crisis, Etihad Airways at around 40%, and Qatar Airways at approximately 20%”.

In the case of Qatar, the airline has taken a number of aircraft out of service, he noted – believed to be around 20 – and put into storage at a little known airport (Teruel) in Spain.

As for DHL’s own air network, Riyadh and Muscat are currently its two main hubs out of the Gulf region. DHL will tomorrow launch a thrice-weekly B747F service between Liège and Jeddah, offering 100 tonne+ capacity and dedicated to pharma and life science cargo, with onward distribution across the GCC.

Meanwhile, the availability of jet fuel is becoming more and difficult, especially for any flights not scheduled such as charter operations, Mr Maier added.

Turning to ocean freight, he referred to the two Cosco vessels that were able to exit the Arabian Gulf, one with a capacity of 19,000 teu.

“We don’t know for sure, but suspicion is that they want to evacuate these vessels out of the Arabian Gulf so they can deployed elsewhere. At this point in time, I would be very surprised if we see vessels going in the other direction through the Strait of Hormuz, given the risk of being trapped again. The whole topic of the strait reopening to commercial shipping looks very unlikely to us, unless there are fundamental changes in the overall political landscape.”

Khor Fakkan, in the UAE, remains the port where a lot of inbound cargo is being filtered, and is becoming congested.

“So we see more activity into Fujairah, but this is coming with limitations in terms of exports. I think it’s getting more and more difficult. I think the port of Sohar [in Oman], has introduced a limit of 3,000 teu and there’s at least five days before sailing.”

And he expects the congestion issue at ports to become even more acute.

“We believe port after port will get congested due to overflows and the reroutings of the containers.”

The Omani port of Salalah, damaged in a drone attack last Saturday, is now partially operational and, in the case of container shipping, largely back to normal, he said.

Trucking capacity is also being closely monitored by DHL, he said, adding: “The more we have to deviate from scheduled the ports of entry to those much further away, the more the availability of trucks will become an issue.”

And with the prospect of more and more containers getting discharged in this way, and facing long journeys across the GCC, the situation will only get worse, he predicted.

“Given the number of customers with significant volumes, on both the import and export side, currently mulling such options, if they do actually start shipping, it will put further pressure on trucking capacity.”

Summing up, Mr Maier said the prominent topic remained “the pressure building up in the strait. Air freight is relatively reliable and stable. One thing we have a close eye on is the security situation around Riyadh.

“We also have to be prepared for any new negative developments.”