Crisis in the Strait of Hormuz: Shipping traffic to Persian Gulf is at a standstill

Geopolitical tensions in the Middle East have reached a new boiling point, with far-reaching consequences for maritime access to the Persian Gulf. For shippers and receivers who depend on this route, the current situation is effectively blocking regular container logistics. As a logistics service provider, Neele-Vat closely follows developments in the region. In this article, we provide an overview of the current status in the Strait of Hormuz and the operational emergency measures shipping companies are currently implementing.

Insurance freeze paralyzes passage of Strait of Hormuz

Although the Strait of Hormuz is not physically closed, commercial shipping traffic has come to a complete halt. The main cause is the decision by international insurers to immediately cease providing coverage for ships defying the passage. Without this coverage, shipping companies are refusing to send their vessels into the risk zone. The current situation on the water is critical. Dozens of ships are stuck inside the Persian Gulf and cannot safely leave the region, while ships that were en route to the region are being denied access to the Gulf of Oman. This has led all major container shipping companies to impose a complete booking freeze on all ports within the Persian Gulf until further notice.

Operational emergency scenarios and ports of refuge

For containers already on board ships, shipping companies have switched to emergency scenarios. To avoid the high-risk areas, cargo is currently being unloaded at safe ports outside the danger zone. The main logistics hubs currently serving as alternatives are Salalah in Oman, the outer side of Khor Fakkan in the United Arab Emirates and the ports of Jeddah and King Abdullah Port on the Saudi Red Sea coast.

From these locations, efforts are made to transport goods to final destinations in the Gulf region via land transport. However, capacity for this type of road transport is extremely limited, leading to significant waiting times.

Impact on logistics costs and War Risk Surcharges.

Forced operational changes and increased risk profiles lead to a sharp increase in overall logistics costs. Shipping companies are introducing high war surcharges to cover additional insurance premiums and operational risks. In addition, shippers face additional handling costs for unloading and temporarily storing containers at alternate ports. The shift from ocean freight to multimodal transport via land routes is also causing a significant increase in costs due to long distances and limited truck availability.

Expected impact on your supply chain

The ongoing disruption in the region will lead to significant delays in the chain. Forced unloading at alternative ports and subsequent land transport will increase the total transit time by several weeks on average. With new bookings being denied, imminent inventory shortages in the Gulf States must be taken into account. Operational uncertainty remains high; until the insurance issue surrounding the Strait of Hormuz is resolved, sailing schedules and transportation schedules will remain unpredictable.

How Neele-Vat supports customers

Neele-Vat specialists continuously monitor the situation around the Strait of Hormuz and the Gulf of Oman through international security agencies and shipping companies. We are in close contact with our agents in the region to monitor the status of stranded shipments and advise customers on alternative routes via the Red Sea and subsequent land transport. Our focus is on proactively informing clients about the financial impact of new surcharges and seeking the most reliable solutions in this dynamic situation.

Do you have questions about the impact of this crisis on your shipments? Then get in touch with your regular contact at Neele-Vat.