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We all know what we are talking about: war has erupted in the Middle
East in a period when peace was a word very frequently heard in public.
This is what AI tells us if you ask to compare its usage in year 2025 as
compared to year 2024: “In 2025, the word peace has seen a significant
increase in public and cultural prominence compared to 2024, shifting from a
general aspiration to an urgent global call.” You can even argue that peace
has quickly become just a dream for many people, perhaps in contrast with the
public promises we continuously receive. Indeed, we live in a complicated and
troubled period: what does this mean to us in transport?
International trade and logistics at its
service thrive when peace exists, not when it is hastily and vaguely
promised. I did some cherry-picking about this issue on the web and,
needless to say, I got involved with a jumble of issues regarding
infrastructure, threats, shortages, blockades, embargoes, damages,
etc.
In
Long Beach, at TPM26, Jeremy Nixon (left)
presented himself ‘with the awareness of someone who is about to close a
chapter. A manager who has lived through mergers, crises, and ‘black swan’
events, he now finds himself commenting on another systemic shock: the
closure of the Strait of Hormuz: "We are on the third day of a major
regional conflict involving ten countries; there are 750 ships blocked,
unable to pass through the Strait of Hormuz: 350 within the Gulf and 350
arriving, of which about 100 are container ships. This means that
approximately 10% of the global container fleet is affected." Quite a
statement!
These numbers give a measure of the magnitude
of the event, even though they could even sound insufficient, as they are
more than a couple days’ old. The statement suggested that we are "in
the worst-case scenario. We were thinking of a few quick strikes and that was
it, but instead we're in the middle of a regional conflict." Whether
this is an early statement or a foretelling intuition, we shall find out as
we get further along in this difficult year of the Fire Horse.
In Italy we have seen fuel prices and gas
prices increase by some 20% in a couple of days. I am now writing from
Switzerland and, as usual, everything here takes a more prudent approach; the
prices are high, but not much higher than a couple of months ago . . . which
makes me think that unrest nourishes speculation and speculation boosts
inflation, in particular in markets that are more inclined to dramatizing.
Inflation in Switzerland is relatively small compared to other areas of the
world.
Sticking to transportation, many carriers, if
not all, had to halt all bookings to the Middle East. The airport of Dubai is
now closed. This is not like closing the airport of my hometown, Turin . .
. The impact of Dubai in international aviation is huge.
The impact on freight rates and on the fluidity
of trade is inevitable. We read that “today, the global fleet is worth 33
million TEUs, and ‘almost 10% is stuck waiting for docking. Fifteen years
ago, docking upon arrival was the norm, with 1-2% attrition. Today, we're at
10%.’
In this chaotic situation repercussions and
action-reaction disruptions will be inevitable, supposing the public will
continue fuelling international trade, despite the gloomy picture. If all of
a sudden customers decide to sit and watch instead of buying, we are in for a
real nightmare in international trade.
If
we use the internet in AI mode, this is what we get: “As of March 2026,
the escalation of conflict in the Middle East has triggered a profound and
immediate crisis in international logistics, characterized by the near-total
suspension of major maritime and aviation corridors.
Maritime Logistics, closure of global chokepoints . . . The conflict has
effectively shut down the two most critical waterways for East-West
trade:
·
Strait of Hormuz closure: following military strikes in
late February 2026, the Strait of Hormuz—through which 20% of global oil and
significant container traffic passes—is effectively closed to commercial
shipping.”
We read on FreightWaves
that, “as of March 2026, MSC Mediterranean Shipping Company has announced an $800
USD per container surcharge (End of Voyage Fee) for all cargo destined
for the Gulf region.” This is a very recent update (March 4, 2026) in
response to security risks in the region’ was the given reason for the
decision.
It has to be noted that the information
obtained on the web immediately after the eruption of the ME events was more
abundant and more qualified (at least in my personal appreciation) than what
you can get on the same pages today (March 7th); so this was three days ago’
information: “The escalating conflict in the Middle East has reached a
critical tipping point in early 2026, triggering a ‘state of emergency’ for
global logistics, following coordinated military strikes by the U.S. and
Israel on Iran in late February 2026, the simultaneous disruption of the
Strait of Hormuz and the Red Sea has upended international trade corridors.
The conflict has effectively paralyzed two of the world's most vital maritime
arteries: the Strait of Hormuz and the Red Sea. Major carriers including
Maersk, MSC, HMM and CMA CGM have suspended transits through these
corridors.”
“Traffic through the Strait of Hormuz plummeted
by approximately 70%" [information dated March 7th].
There was abundant information about the
consequences: “Cape of Good Hope diversions: Roughly 170 container ships have
been rerouted around Africa, adding 10–15 days to Asia-Europe voyages and
increasing fuel consumption by roughly 40%. Port closures: operations at
major hubs like Jebel Ali in Dubai were temporarily suspended following
aerial interceptions and fires. Air Freight paralysis: air cargo is facing
its most significant disruption since the COVID-19 pandemic. Airspace
closures: extensive "no-fly zones" over Iran and Iraq have forced
carriers to reroute, removing an estimated 18% of global air freight capacity
in a single week. Hub neutralization: major transhipment hubs in Dubai, Doha,
and Abu Dhabi have been operationally neutralized, with over 21,000 flights
cancelled in the first few days of March 2026. Rate spikes: shippers are
bracing for sharp increases in air freight spot rates as capacity collapses
on Asia-Middle East-Europe corridors. Economic and Supply Chain fallout: the
‘belligerent situation’ is driving immediate cost pressures across all
sectors.”
I asked AI to explore specific alternative trade
routes, developed to bypass these regional chokepoints. Some answers were
matter of course and others were less predictable: March 2nd 2026 — “The
proposed 950-kilometre "Salman Canal," intended to connect the
Arabian Gulf to the Gulf of Aden/Red Sea, has resurfaced as a strategic,
albeit speculative, project to bypass the Strait of Hormuz. The project aims
to secure oil exports against Iranian disruptions, with estimates suggesting
a $80–$100 billion cost to build a 150m wide, 25m deep waterway.” As it
happens AI may often be soundly right, in particular if one can live
eternally and forget about the concept of time. This is not an alternative
for tomorrow . . .
These are other suggested alternatives, as I
considered more practicable: (source: Scan Global
Logistics)
1. Alternative Maritime Routes
• Cape of Good Hope
Diversion: The most significant alternative to the Suez Canal is re-routing
vessels around the southern tip of Africa. While this adds roughly 10–18 days
to transit times and increases costs due to higher fuel consumption, it
allows shippers to avoid the Bab el-Mandeb Strait.
• Alternative
Transhipment Hubs: Instead of using high-risk, direct routes, carriers are
utilizing hubs like Salalah or Sohar in Oman, or Colombo in Sri Lanka, for
cargo transfers.
• Alternative Gulf
Entry Points: For cargo destined for the UAE or Saudi Arabia, shippers are
bypassing high-risk areas by routing through ports like Khorfakkan (UAE), or
Jeddah and King Abdullah Port (Saudi Arabia).
2. Multi-Modal and Land
Corridors
• Land Bridges
(Trucking/Rail): road and rail transport from hubs in the UAE and Oman are
being used to move goods to Saudi Arabia and other Gulf Cooperation Council
(GCC) countries.
• The "Middle
Corridor": the Trans-Caspian route connecting China to Europe via
Central Asia and the Caucasus is being increasingly considered as a secure
alternative to sea routes.
Over and above these suggestions, FIATA published a recent
document which is aimed at providing guidance to its constituency of
practicing freight forwarders and LSP’s.
When AI is dealing with structural and
operational shifts again we are building a house that perhaps will be good
for our children’s children:
• Diversification
of Suppliers: companies are reducing reliance on single routes or suppliers
in conflict zones by sourcing goods from other regions.
• Building Inventory
Buffers: to combat longer shipping times caused by detours, firms are
increasing inventory levels (safety stocks) closer to final markets.
• Increased Use of
Local Partners: relying on local logistics providers who have real-time
intelligence on which ports remain operational and which corridors are safe.
• Utilizing Technology:
employing AI-powered monitoring tools for real-time visibility and risk
management to identify threats before they impact shipments.
The World Economic
Forum
published a lot of material on this particular issue; our expert readers are
best placed to judge whether this is contributing to cast light, or rather a
shadow on the landscape we are contemplating: “As of March 2026, the Middle
East security situation has escalated, significantly impacting the global
economy, primarily through energy markets and shipping routes. The
escalation, driven by US-Israel actions against Iran, has resulted in
immediate disruptions that the World Economic Forum (WEF) and other analysts
highlight as key global risks.”
More information can be downloaded through AI,
if we look at aviation and air cargo in particular, which are interesting
areas for our readers. “The air cargo sector is currently experiencing a
historic capacity shock, with an estimated 18% of global air freight capacity
removed from the market, early in March 2026. This disruption stems from the
strategic paralysis of the Gulf's ‘mega-hubs’ and widespread airspace
closures.
Collapse of Global Transit Hubs: the
triad Dubai (DXB/DWC), Doha (DOH), and Abu Dhabi (AUH), which typically
handle nearly 30% of global air cargo, have faced unprecedented operational
suspensions. Emirates and Qatar Airways suspended all commercial and
freighter services in early March due to safety concerns, removing roughly
22,000 tonnes of daily capacity from the global network.
Booking Freezes: for
example, major forwarders like DSV, as well as Lufthansa Cargo have implemented
temporary booking stops for destinations including Tel Aviv, Beirut, Amman,
and Dubai. Route rerouting and payload penalties: airspace over Iran,
Iraq, Israel, Jordan and the UAE is largely restricted, forcing a radical
reconfiguration of Asia-Europe flight paths.
Technical stops: freighters
are being rerouted to alternative hubs in Central Asia or Turkey for
refuelling. These longer journeys increase fuel burn and often require
payload reductions (carrying less cargo to carry more fuel).
Transit delays: even for flights
that are not cancelled, shippers are seeing 7–10 day backlogs as regional
networks struggle with aircraft and crew displacement. Drastic rate
increases and surcharges: the tightening of capacity and rising operational risks
have triggered immediate price spikes, with war risk and emergency
surcharges. Sector-specific vulnerabilities: perishables and pharma, the
disruption to cold chain logistics in the Middle East is particularly acute,
as in high-tech electronics. European manufacturers are facing assembly halts
as critical components from the Indian subcontinent and Southeast Asia are
stranded by the hub shutdowns.”
At that point AI asked whether I would like to
see a comparison of current spot rates for air freight versus ocean freight
on the Shanghai-to-Rotterdam corridor. I thought it was showing considerable
proactivity in an investigation that was starting to take its own course .
. . Well, AI was also warning me that the proposed results could contain
mistakes. I regard this as universal truth that we should always keep in
mind, in particular today.
Here is what I received on my screen and most of our
readers are perfectly placed to judge whether the information received is
correct: “Shanghai-to-Rotterdam corridor is currently experiencing extreme
pricing volatility. As of March 2026, the cost gap between air and ocean
freight is narrowing, as maritime diversions around the Cape of Good Hope
increase sea freight expenses, while air capacity remains severely
constrained.
Current Spot Rate Comparison (March
2026)
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Feature
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Air Freight (Standard)
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Ocean Freight (FCL 40' HC)
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Current Spot Rate
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$6.90 – $8.50 per kg
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$2,209 – $3,100 per container
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Transit Time
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5 – 7 days
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36 – 46 days (via Cape)
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Key Surcharges
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$0.60/kg War Risk Surcharge
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$1,500 – $4,000 Emergency
Surcharge
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Trend
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Increasing due to 18% capacity
loss
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Stabilizing after 15% recent
decline
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Key Pricing Drivers
• Air-to-Sea price ratio:
historically, air freight is 12–16 times more expensive than sea freight.
However, with current emergency ocean surcharges reaching up to $4,000 per
FEU, the effective cost of sea transport has risen, making air cargo a more
viable "emergency" option for high-value goods.
• The "Cape Penalty":
ocean voyages now take 10–15 days longer than the Suez route. For shippers of
time-sensitive electronics or fashion, the $6.90/kg air rate is increasingly
viewed as a necessary premium to avoid a 45-day sea transit.
• Capacity crunch: air
freight rates are under upward pressure as major Gulf hubs like Dubai and
Doha face operational suspensions, forcing cargo onto fewer available flights
and driving up spot market bids.
AI then asked me whether I “would like
to analyze how these rate hikes are specifically impacting just-in-time
manufacturing sectors in Europe?” I decided to leave it at that. My mind
went back to those days in 1973 when all of a sudden we suffered the first
(to my memory) restrictions in using private cars, because of the penury of
fuel caused by the war in the Middle East: the then famous, at least in Italy
and in Europe, “domeniche
a piedi” i.e. Sundays on foot. That is over fifty years ago. I remember I
was thinking how could the whole world get itself tangled in that situation,
which was so inevitably tied to the destiny of petroleum, without thinking of
alternatives. That would obviously come at a price, but preserve our freedom
and independence, why not?
Over fifty years on, it seems to me we have
not moved much from that point.
Marco Sorgetti
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