Global supply chains are struggling with freight delays, canceled shipping routes, and elevated insurance rates in the wake of the Trump Administration move on Saturday to launch military strikes at Iran.
Supply chains typically experience an average increase in cost-to-serve of 40% following major disruptions, and in the wake of the US-Iran conflict, business leaders are facing multiple ongoing disruptions, according to analyst group Gartner. The worst impacts of that escalation are yet to be felt: the potential for $100+ oil prices, 3PLs potentially declaring “force majeure” and voiding contracts, and a general increase in inflationary forces as shipping prices and lead times increase across the board, according to Gartner VP analyst David Gonzalez.
The implications for global ocean container shipping supply chains are large, according to Xeneta Chief Analyst Peter Sand. “Carriers are on red alert and we have seen signs of them pre-empting this security deterioration in the Middle East, notably with CMA CGM last month reversing a decision to return its FAL1, FAL3 and MEX to the Red Sea citing ‘the complex and uncertain international context’. [And] earlier this week, Maersk announced its ME11 and MECL services would be rerouted via Cape of Good Hope due to security concerns in the Red Sea region.”
Taken together, those impacts mean that a largescale return of container ships to the Red Sea in 2026 is now unlikely, extending an era where commercial vessels have largely avoided the Suez Canal since late 2023 due to attacks by Iran-backed Houthi militia in the Red Sea region, following the escalation of violence between Israel and Hamas. Their alternative route is to sail a far longer route around the Cape of Good Hope, a path which adds time, cost, and capacity to global routes.
Closer to Iran, Middle East regional freight routes could see even greater disruption following Iran’s threat to close the Straights of Hormuz, Xeneta said. “There is no viable alternative to getting containers in or out of ports such as Jebel Ali by ocean if [the] Persian Gulf is off limits. Carriers will instead omit these calls on east-west services and drop boxes at a least-worst alternative port for onward transportation by road. This will cause severe disruption and port congestion at a regional level, but will not have a major impact on a global scale when compared to the seismic influence of conflict in the Red Sea.”
The new war will send ripples through freight routes far beyond the shores of Iran, agreed Judah Levine, Freightos’ Head of Research. “The Houthis have threatened to resume strikes. In response, carriers who had resumed some Red Sea sailings have diverted vessels back around the Cape of Good Hope, possibly pushing a full Red Sea return farther off,” Levine said. “Major container carriers including Maersk, Hapag-Lloyd, MSC and CMA CGM are ceasing services to and diverting vessels away from the waterway and region, with CMA CGM introducing a $4,000/FEU emergency surcharge for services to the affected areas.”
The escalation of conflict in the Middle East is causing disruption to global liner shipping, with many carriers pausing or rerouting services as they assess the evolving security situation, agreed World Shipping Council (WSC) President & CEO Joe Kramek. “The Middle East sits at the crossroads of major global trade routes. When services through the region are suspended or diverted, the impact is not limited to the immediate area. Longer voyages and changes to network rotations can lead to delays and scheduling adjustments across connected trades routes worldwide,” Kramek said. “The industry has recent experience navigating disruption, including during increased hostility in the Red Sea. While rerouting is complex and can extend transit times, it has enabled trade to continue moving under difficult conditions.”
And all those impacts could quickly grow if the new conflict lasts weeks or months, rather than days, warned Simon Geale, EVP at Proxima. “In terms of where we stand right now, the primary impact will come from the effective closure of the Strait of Hormuz. 20% of the world’s seaborne oil and most of the LNG from the region moves through the Strait of Hormuz, and so that load is too large to be replaced or rebalanced without some economic effect on businesses and consumers,” Geale said. “Clearly, fuel bills will go up, but also prices in sectors where energy is key to production, like food, will rise if resolutions are not quickly found. Hopes for that quick resolution are already fading as shipping companies pause or turn back ships, insurance policies are cancelled, and with price hikes of 50% happening over the weekend.”
