Obstruction of Global Economic and Trade Arteries -- Interpretation of the Impact of the Middle East Situation on Global Shipping

　　Xinhua News Agency, Beijing, March 17 - Title: Global Trade and Economic "Arteries" Encounter Blockage - Interpreting the Impact of the Middle East Situation on Global Shipping

　　Xinhua News Agency reporter Wang Ping

　　The US-Israel-Iran conflict has lasted for over two weeks, severely obstructing shipping through the Strait of Hormuz, a critical "lifeline" for global shipping. This has triggered a chain reaction of soaring global shipping costs and supply chain adjustments. Analysts warn that if the Strait of Hormuz remains paralyzed, the global logistics system will face its most destructive crisis since the outbreak of the COVID-19 pandemic.

　　"Artery" Blockage Causes Shipping Chaos

　　The Strait of Hormuz plays a crucial role in the global supply and transportation of oil and liquefied natural gas, serving as a true "artery" in the global shipping system. According to estimates by the US Energy Information Administration, the daily transportation volume of crude oil and petroleum products through the Strait of Hormuz will be about 20 million barrels in 2025, with annual energy trade reaching nearly $600 billion. Since the US and Israel's military strikes on Iran, the security of this strategic passage has plummeted.

　　Due to the factual blockage caused by the conflict, the traffic through the Strait of Hormuz has dropped sharply, with many merchant ships forced to halt outside the strait or reroute. The British Lloyd's Register of Shipping stated that from March 1 to 13, only 77 ships passed through the Strait of Hormuz. In contrast, from March 1 to 11, 2025, 1,229 ships passed through this strait.

　　Global shipping giants are taking precautionary measures. Danish Maersk Shipping Company, Swiss Mediterranean Shipping Company, French CMA CGM Group, and German Hapag-Lloyd have recently announced the suspension or cessation of routes through the Strait of Hormuz, directing their vessels to designated safe havens or opting to bypass the Cape of Good Hope in Africa.

　　Recently, the once-busy Jebel Ali Port in Dubai was temporarily forced to cease operations due to a fire caused by debris from intercepted missiles. The British magazine "The Economist" analyzed that the damage caused by this "soft closure" is almost the same as a formal blockade, and most operators can no longer maintain normal commercial navigation.

　　Multiple Premiums Push Up Logistics Costs

　　The prolonged conflict is pushing up global shipping costs through freight, insurance, and fuel prices.

　　Affected by rerouting and reduced capacity, global sea freight rates have risen significantly. Bypassing the Cape of Good Hope increases the voyage by about 3,500 to 4,000 nautical miles, extending transportation time by 10 to 14 days. The rental cost of a standard 20-foot container has risen by about $200, meaning freight rates have increased by about 15% to 20%. CMA CGM has started charging an "emergency conflict surcharge" of $2,000 to $4,000 per container, while Hapag-Lloyd's "war risk surcharge" is as high as $1,500 per container.

　　The insurance market's reaction is particularly intense. As the conflict expands, maritime insurance premiums for war insurance have skyrocketed. Analysts at US Jefferies Group pointed out that since most tankers are valued between $200 million and $300 million, a new insurance rate of 3% means a hull war risk premium of about $7.5 million, whereas the pre-conflict insurance rate was only 0.25%. Since March 5, several maritime insurance companies have canceled standard war risk insurance for Gulf routes. Shipowners must pay extremely high premiums to maintain navigation, with some quotes soaring to 10% of the hull value. It is estimated that a single insurance expenditure for a supertanker valued at $138 million crossing the strait could be as high as $14 million.

　　Rising fuel prices have also directly increased operating costs. As international crude oil prices fluctuate upward, ship fuel prices at major global shipping hubs have risen sharply. Maersk CEO Vincent Clerc warned: "These price increases will be passed on to our customers and consumers."

　　Global Supply Chain Network Under Pressure to Adjust

　　The passive adjustment of the shipping pattern is having deep spillover effects, forcing global supply chains to make corresponding layout adjustments.

　　The risk of disruption in key raw material supply chains is increasingly prominent. The Middle East is not only an energy center but also an important exporter of industrial raw materials such as aluminum and fertilizers. Currently, about one-third of the world's urea needs to be transshipped through the Strait of Hormuz, and nearly half of the global sulfur supply comes from the Gulf region. The stagnation of shipping through the Strait of Hormuz has led to the risk of disruption in global agricultural and chemical industry supply chains.

　　The precision manufacturing industry has also been severely affected. Analysts believe that due to the difficulty in coping with an additional two-week delay in transit, automotive assembly plants in Germany, the United States, and other places are expected to feel the impact of delays in Asian component supplies within two to three weeks.

　　Faced with sea route interruptions, some high-value or time-sensitive goods are turning to air transport. Air freight prices from South Asia to Europe have risen by about 70%, and this "cost transfer" is rapidly compressing the profit margins of the industrial chain.

　　The United Nations Conference on Trade and Development recently warned that the disruption of traffic through the Strait of Hormuz highlights the vulnerability of maritime energy transport routes to geopolitical tensions, which will have a huge impact on global supply chains and commodity markets.