The situation in Iran and across the Middle East is creating new disruptions in global trade. Most ocean and air carriers have suspended service to and from the region until further notice. Service schedules are changing frequently. Air freight services are being widely impacted. We expect the situation to remain dynamic until military action has ceased, and there will be domino effects that persist even longer.
There is an expectation that ocean freight services will be disrupted across major trades as containers back up at transshipment hubs that do not have the capacity to handle a sudden stoppage of movement efficiently. This includes major gateways across Asia. Ripple effects will be felt on trades that do not touch the Middle East, including the Transpacific and Transatlantic trade lanes. Equipment availability will also be impacted.
Concerns about rising fuel prices are also widespread. With the Strait of Hormuz currently inaccessible, oil prices are spiking. The duration of this conflict and access to the strait will determine how fuel rates may fluctuate for international shippers.
Freight rates overall are also expected to increase. Rates from Asia to the US lanes rose on March 1; if the conflict continues, additional increases are likely. Rates on other lanes are likely to rise as well.
Further, carriers who had conveyed plans to resume Suez Canal transits are pivoting in real time and delaying a return while this latest conflict plays out.
The situation is very fluid. Be prepared for delays and potentially higher rates in the weeks ahead. For urgent shipments, please discuss options with your CVI customer service representative.
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Your CVI team is here to assist you through these current market challenges. Ocean freight, air freight, domestic road/rail, and Customs Compliance – count on our dedicated professionals to care for you and your supply chain. Call us and let us show you what we can do!
Rachel Shames
VP, Pricing & Procurement
CV International, Inc.