As the U.S. naval blockade of Iranian ports passes into its third day, importers and exporters remain in wait-and-see mode amid increasing fuel surcharges and a lack of safety guarantees for cargo shipping surrounding the Persian Gulf and the Strait of Hormuz.
But while spot freight rates across the board have soared since the start of the Iran war, shippers can still benefit from lower contract rates by soliciting competitive bids from ocean carriers, according to maritime research consultancy Drewry. With contract season entering its final stretch, shippers are still negotiating rates and leveraging carrier offers ahead of traditional May 1 start dates.
“If you’re a shipper and you’re preparing to go to bid, do not hesitate,” said Philip Damas, managing director and head of Drewry Supply Chain Advisors, during a Wednesday briefing. “Go ahead, because the situation is still favorable. You will be able to secure lower contract rates than last year.”
These contract rates are forecast to remain manageable since the Iran conflict has not slowed down the underlying trend towards global container shipping overcapacity. Damas maintained the supply-and-demand balance “will still weaken during the rest of this year and next year.”
Damas did note one caveat. Rates on Middle East-connected routes are best left outside standard bids for now, he said, as those routes are still “extremely unstable.”
For example, cargo shipped from Shanghai to the Port of Jebel Ali has quadrupled from Feb. 27 to April 10, after most container lines suspended Persian Gulf-bound bookings. The increased price per 40-foot container on that route sits at roughly $6,600 as boxes are mostly discharged at ports outside the Gulf and redirected inland via road networks.
To counteract “out of control” fuel surcharges being implemented by the ocean carriers, Drewry advises importers and exporters to take two steps: ensure that any partial normalization of fuel prices leads to a reduction of bunker adjustment surcharges and implement a “standard bunker policy” across all carriers.
Shippers have limited direct control over bunker surcharges, but they can push for more transparency by tying them to published fuel indices and ensuring contracts include mechanisms for downward adjustments when prices ease.
In practice, larger shippers may be able to standardize bunker terms across carriers during bid cycles, while others rely on benchmarking and forwarder agreements to keep surcharges in check.
“For the fuel surcharges, we see that marine fuel prices will stay above the pre-conflict situation for a number of months, depending on the scenario, and we expect that some carriers will slow down their ships to economize on fuel,” said Damas.
While importers and exporters navigate the intricacies of the evolving situation as the two-week ceasefire between the U.S. and Iran hangs in the balance, shipping activity in the war-torn region appears to be more predictable than in previous weeks.
The U.S. naval blockade has effectively prevented vessels from coming and going to Iran, although the Strait of Hormuz is still seeing light traffic.
According to U.S. Central Command (CENTCOM), no vessels impacted by the blockade made it past American forces in the first 48 hours of the operation. Additionally, nine oil tankers have complied with direction from U.S. forces to turn around and return toward an Iranian port or coastal area.
Total crossings through the Strait of Hormuz rose on Tuesday to 16 vessels, but commercial traffic remained limited to eight crossings, two higher than the day prior.
According to data from maritime visibility platform Windward, 810 ships remain in the Persian Gulf.
Despite President Donald Trump’s insistence Tuesday that the Iran war is “very close to over,” and reports from MS NOW Wednesday that the U.S. and Iran could return to negotiations in Pakistan as soon as next week, Iranian military officials have insisted they are willing to expand the scope of the conflict.
Early Wednesday, General Ali Abdollahi Aliabadi, the leader of Iran’s joint military command that oversees Iran’s army and Islamic Revolutionary Guard Corps (IRGC), threatened that the armed forces would block exports and imports across the Persian Gulf region, the Gulf of Oman and the Red Sea if the U.S. did not end its blockade.
Aliabadi added that the U.S. blockade is “a prelude to violating the ceasefire.”
Container vessels from major ocean carriers have largely avoided the Red Sea even after the Iran-aligned Houthis suspended their attacks on commercial ships in the waterway last fall.
The threat of safety in the Persian Gulf has led to a slight bump in Red Sea container traffic since the start of the conflict.
According to Drewry, Red Sea mainline service capacity—measured by TEUs transported per week—increased 11 percent from Feb. 26 to March 26. During the same time frame, mainline service capacity to the Gulf ports and on combined Gulf-Indian Ocean loops has been cut by 46 percent.
But while Drewry had previously been anticipating that Suez Canal transits would gradually phase back to a normal state “by about this time next year,” the company has reversed course.
“It would have been a gradual increment initially focused on backhaul transits,” said Simon Heaney, senior manager of container research at Drewry, during the briefing. “Thanks to this conflict in the Middle East, that has now been deferred. Until this situation is resolved, we believe that the Red Sea diversions will continue for the foreseeable future.”
On Wednesday afternoon, Reuters reported that Iran could propose to the U.S. in a potential deal that it would consider allowing ships to sail on Oman’s side of the Hormuz strait without the worry of interference or attack.
The proposal would be the first visible step by Tehran to pull back from more aggressive pursuits, which included charging a toll for ships to pass through the oil conduit and imposing sovereignty on the strait.
