Shipping Grinds to a Halt Along the Persian Gulf as Iran Imposes Blockade at Strait of Hormuz

Freight carriers are ordering cargo ships to shelter in place or outright withdraw from the Strait of Hormuz as shippers close operations in the Red Sea and Suez Canal following an Iranian blockade of the vital waterways.About 170 containerships carrying the equivalent of 450,000 20-foot containers are being told to stand down after the Iranian Revolutionary Guard Corps announced that no ships may pass for any reason. Abu Dhabi, Kuwait, and Bahrain all announced temporary suspensions of maritime operations at several facilities.The throttling of transit routes comes amid strikes on two ships off Oman and aerial attacks in retaliation for Israel and America’s offensive against Iran. Dubai’s Jebel Ali port facility was also struck, causing a fire that still burned on Sunday afternoon. Several mariners, including 15 Indian nationals and five Iranians, were aboard one of the Omani-parked ships, the Skylight, which has been docked at the Khasab Port in Oman since February 22, according to the Maritime Security Centre. The ship, which began sinking, forcing the evacuation of the crew, four of whom were injured, is on the Treasury Department’s list of sanctioned vessels. It is considered part of Iran’s shadow fleet, illegally transporting Iranian oil, Defense News reported.The largest capacity carrier in the world, Italy’s Mediterranean Shipping Company, announced early Sunday that it was suspending operations through the Strait to protect the safety of its crews. It ordered its ships to “proceed to designated safe shelter areas until further notice.”“As a precautionary measure, MSC has suspended all bookings for worldwide cargo to the Middle East region until further notice. The Company continues to closely monitor developments and is working with relevant authorities to ensure the safety of its operations,” the company said in a statement. Container News reported that other global carriers, Danish-owned Maersk, French company, CMA CGM, and the German fleet, Hapag-Lloyd, will be diverting the transcontinental routes around South Africa’s Cape of Good Hope, adding up to two weeks for global supplies to reach their destinations between Asia and Europe and the East Coast of the Americas.“We remain committed to minimizing the impact on our customers’ supply chains and will continue to keep them updated on the situation. Once the situation stabilizes and security situation again permits, we will continue to prioritize the Trans-Suez route,” which is the “fastest, most sustainable and most efficient way for us to serve our customers” among India, the Middle East, and the Mediterranean, Hapag-Lloyd said in a statement.A maritime historian and shipping expert at Campbell University, Sal Mercogliano, says the decision to reroute or hold in place has less to do with the blockade itself than with the insurance rates that will skyrocket if carriers attempt to cross the strait in the midst of a war.“Right now, every major Protection and Indemnity (P&I) Club is notifying their clients of the need for additional protection (AP). You see, the shipping companies are not worried about incurring damage from the Iranians. They are worried about incurring damage that is not INSURED!” Mr. Mercogliano posted on X.Several maritime insurance brokers told the Financial Times that shipping companies are receiving cancellation notices for policies covering ships in the Strait of Hormuz or raising rates as much as 50 percent in the coming days.Lloyd’s List Intelligence noted that the blockade may not be extended to Chinese-owned vessels. A Chinese cargo ship was seen passing through the strait on Sunday. As Iran seeks retaliation for the strike that killed its 37-year reigning Supreme Leader Ali Khamenei and several other high-profile officials, including its defense minister, chief of staff of the Iranian Armed Forces, and commander of the IRGC Ground Forces, among others, the Associated Press reported that the Iranian-backed Houthis will resume attacks on carrier vessels passing through the Red Sea.Iran’s blockade could have lasting impacts. One fifth of the world’s oil travels through the Strait of Hormuz, which connects the Persian Gulf and Arabian Sea, and global shippers carry everything from food and produce to pharmaceuticals, minerals, and car parts. Mediterranean Shipping Company said Saturday that it is temporarily raising its base rates by as much as 44 percent between March 15 and March 30.

Shipping Grinds to a Halt Along the Persian Gulf as Iran Imposes Blockade at Strait of Hormuz

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