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By Stuart Todd
A return to normal for ocean shipping through the Strait of Hormuz could be months away, even if the tenuous ceasefire agreement between the US and Iran holds, a senior logistics executive has warned.
“We are in the very, very early stages (of a possible re-opening of the strait). The immediate focus will be on evacuating the trapped vessels, which have been stuck in the Arabian Gulf for the last 40 days or so. Certainly, at this point, we don’t expect to see massive capacity becoming available for services into Dubai, Jebel Ali, and Abu Dhabi,” said Tobias Maier, DHL Global Forwarding’s (DGF) CEO for the region and Africa.
He was speaking yesterday at DHL’s latest Middle East ‘navigating disruption’ webinar with customers, and began by highlighting that on day 40 of the crisis and on day one of the truce, there were reports of attacks on Bahrain, Saudi Arabia, Kuwait, and the UAE earlier today.
However, Mr Maier stressed that if the ceasefire was to really be respected, by all parties, DHL was “cautiously optimistic that the overall situation will improve, and we might be entering into a period of pretty dynamic days and weeks to come,” he said.
The way the situation evolves will clearly depend on the stability of the ceasefire, insurance coverage, the confidence of shipping lines in sending crews through the strait in a secure way, and also in getting vessels out.
“We need to see what the market mood is over the next few days. For now, nothing has dramatically changed versus yesterday or the day before. Reaching a stage where the strait can open reliably and safely and we can see vessels coming back to the big ports in the Arabian Gulf, will for sure take months.”
He continued: “A rough guideline in the industry has always been ‘one week of disruption/one month to absorb’. So, based on where we stand today, almost six weeks into the crisis, we are probably somewhere in the range of four to six months before a return to normal. The message to customers should be to expect disruption, chaos, and delays, changes in schedule, and extra costs to continue for a lengthy period. We still have a lot of containers in the wrong place. There’s still a lot of imbalances.”
On the air freight front, participants in the webinar heard how, since the beginning of the crisis, DHL had not been able to operate from its main air hub in the Gulf, Bahrain.
Backup measures see DHL flying regularly to Riyadh, in Saudi Arabia, and to Muscat, in Oman, which currently serve as its two air hubs for distributing cargo across the Arabian peninsula. It now has daily flights from Europe going into Riyadh and Muscat, and also daily flights from Hong Kong into Muscat, connecting into Riyadh. DHL is also serving Israel with three flights a week from Brussels.
Last week, DHL launched a thrice-weekly B747F service between Liège and Jeddah, in Saudi Arabia, dedicated to pharma and life science cargo, with onward distribution across the GCC.
DGF VP and head of air freight, Middle East & Africa Ben Lambert said air cargo capacity was now on a stable footing to and from the region.
“Some of the Gulf airlines, like Emirates and even Etihad, have come out and said they will be at 100% capacity for the next few weeks. I think there are still questions about whether this means 100% of their flights will be operating, or they will be serving 100% of their lanes. But either way, it is a positive message.”
Quizzed on when DHL expects to be flying into its Bahrain hub again, and also to Kuwait, Mr Lambert said: “That’s the question we’re all asking ourselves. There are talks with the authorities in Bahrain about getting the airlines back online, which is encouraging. As for Kuwait, its airspace remains closed, and there haven’t been any discussions yet about the airport re-opening.”
On the ocean freight, side, the key takeaway from the webinar was the growing congestion at the Gulf ports that remain open, such as Khor Fakkan in the UAE, and Sohar, in Oman, access to both does not entail passing through the Strait of Hormuz.
“There have been a number of cases of vessels cutting and running because they are unable to discharge all their cargo and are then expected to bring the containers back to ports in India or Sri Lanka, or even all the way back to the point of origin, depending on the carrier’s decision. So, the congestion situation remains a serious concern,” said DGF’s head of FCL and trade management, Middle East & Africa, Huinan Khan.
A knock-on effect from the congestion is a shortage of trucking capacity to take containers from ports to destinations across the Gulf region.
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