News / Two million teu of cargo caught in Hormuz closure

As the US/Israel-Iran conflict enters its fifth day and the Strait of Hormuz remains de facto shut, the amount of ocean freight that could find itself caught up in the logistical chaos has become clearer.

At the final session of this year’s S&P Global TPM event in Long Beach, Vespucci Maritime CEO Lars Jensen told delegates around 2m teu was trapped on either side of the strait or en route to affected ports.

“You have all seen carriers have adopted various approaches under which circumstances cargo is going to be discharged in other ports; how much cargo is actually on route towards the Strait of Hormuz on all carriers?

“If you look at all the cargo that is either on board vessels steaming for the ports in the Gulf, or at least are booked within the next 90 days to go towards the Gulf, we are very roughly talking 2m teu.

“These are not all yet loaded on ships; but part of this absolutely is, and going to be discharged in various ports – a significant portion of that initially will be put into the ports right around the Strait of Hormuz – Fujairah, Sohar, Salalah – and it will spread to Colombo,” he said.

On the sidelines of the conference, one forwarder told The Loadstar that one of his Jebel Ali-bound containers was yesterday unloaded by the carrier in the North China port of Qingdao, barely one call into the service rotation, indicating a backlog beginning to build in China.

Meanwhile, in the wake of MSC’s announcement yesterday that it was calling “End of Voyage” on Gulf-bound shipments, another forwarder said simply it was “expecting boxes to end up all over the place for the princely sum of $800, and been charged demurrage as soon as the box hits the yard”.

However, Mr Jensen said that once the initial wave of congestion settled down, the long-term impact on global container shipping might not be as bad as it may seem today.

“If you think back to the outbreak of the Red Sea crisis, which caused congestion in places like Singapore, this is what we should brace for in the coming weeks, and unless the shooting stops and Hormuz opens, this is going to continue.

“Now, this is going to sound weird, but globally – strictly on container shipping – it’s a problem, but it’s not a major problem. Definitely not pandemic scale – and it’s also not even Red Sea scale.

“With the Red Sea, we had major flows that had to be diverted all the way around Africa. In this case, it is only the cargo in the Gulf – from a global perspective, it will contract capacity some, but it’s not a major disaster,” he said.

However, he did acknowledge that there were limited options for regional supply chains to adapt.

“For the countries in the Gulf, this is a major disaster, because it’s highly unlikely there’s going to be enough overland capacity to move the cargo. We’re going to have to discharge it either in the northern part of the Red Sea, or all the way down in South Oman, and move it over,” he said.

There is also likely to be tight competition to secure trucks, particularly in Saudi Arabia which has a licence to operate in the UAE. DHL Global Forwarding CEO Oscar de Bok told The Loadstar block-booking Saudi trucking capacity to help move air freight volumes from Riyadh to the UAE had been one of the company’s first reactions after fighting broke out.

“And what if, just hypothetically, this becomes like the Red Sea and lasts another year or more?” Mr Jensen asked. “In that case, we will see the same phenomenon as the Red Sea – liner companies will adjust schedules, and cargo will come in through southern Oman or Jeddah.

“But from a global supply-demand perspective, it is relatively limited  on how much this actually changes the overall capacity equation,” he concluded.