Updates on Iran War’s Impact on International Shipping

Ocean freight rates have been elevated since the start of the Iran War. However, as we’ve covered in Universal Cargo’s blog, international shipping’s capacity is not stretched thin by it. Shippers knew the industry’s ocean carriers, never being ones to waste a good crisis, would raise freight rates in light of the conflict.

The question is how long will they be able to maintain higher rates (freight rates were actually quite low before the war hit).

Blank Sailings on the Way?

Not only is capacity not thin, demand has decreased and analysts forecast carriers to soon turn to their most effective capacity-controlling measure: blank (cancelled) sailings.

In an article the Journal of Commerce (JOC) published late last week, Keith Wallis wrote:

Blank sailings, service cancellations and routing changes are among the likely impacts on container shipping in the coming months from the Middle East war, shipping executives and analysts said Thursday. Longer-term, potential oil shortages could significantly affect global manufacturing, curtailing container volumes, they said.

Just today, the JOC published an article by Mark Szakonyi, in which he wrote:

Shipping analysts have warned that ocean carriers may be forced to blank sailings and even outright cancel services in the coming months if bunker fuel supplies continue to tighten amid the ongoing closure of the Strait of Hormuz, through which 20% of the world’s oil supplies typically transit. For now, the focus for shippers is getting a handle on how much more they’ll be paying for fuel, how those costs are calculated, and how much more energy costs could rise.

Fuel Prices Are the Biggest Factor

Yes, while the supply-demand equation doesn’t support higher rates, there is the fuel factor that does support increases.

Initially, oil prices spiked with the start of the Iran War. Brent Crude went from around $70-73 a barrel to $120-123 per barrel. The price then fell back under $100 and, while volatile, stayed under $100 for a few weeks. But this week, Brent Crude climbed back up to about $111 per barrel (WTI Crude is at about $100 per barrel).

Carriers Have Extra Incentive to Increase Freight Rates

With factors like the increased fuel costs, ships and crew stuck in the Persian Gulf region, and skyrocketed insurance premiums in and around the conflict zone, Hapag-Lloyd claims the Iran War was increasing its weekly operational costs by $40 million. The company then updated that estimate to $50 – $60 million.

Based on dividing the carriers’ 2025 annual operating costs of $20 billion by 52, the average weekly operating costs for Hapag-Lloyd would normally be about $384.6 million.

While I have a little bit of doubt the weekly costs increase for Hapag-Lloyd are as high as its announced estimates, if it’s anywhere close to correct, the company’s CEO was right in saying, as quoted in Wallis’s article, that’s “not something that you can sustain for very long.” My doubts are alleviated some knowing that carriers have to build new service routes and networks, often over land, to get goods and assets out of the Persian Gulf region. Thus, Carriers have good reason to try even harder than usual to push freight rates up.

Goods in Persian Gulf Getting Out

Carriers are managing to get cargo and assets that were stuck in the Persian Gulf out, as Wallis reported:

To date, the Iran war has had a limited impact on global trade except for escalating oil prices, Hapag-Lloyd CEO Rolf Habben Jansen said during the carrier-backed event. He pointed out the carrier and shippers have come together to agree on alternative transport options, including road transport, for freight in the Gulf so that “92% of cargo that was stuck now has a clear delivery date.”

That should mean, even if conflict drags on for the Trump Administration to get a confirmable and accountable agreement from Iran that it will no longer pursue nuclear weapons, carrier operating costs should not remain as high as they are now indefinitely.

Demand, as mentioned before, doesn’t support highly elevated freight rates. That means carriers will be in no rush to return service to normal through areas like the Red Sea, Suez Canal, and now Persian Gulf, as that would be like injecting more capacity into an already bad supply-demand equation for them.

Carriers will want to do all they can to limit capacity, as forecasts are not showing demand growth for international shipping the way we’ve traditionally seen it. In fact, projections are awfully close to no growth at all, as reported in Wallis’s article:

Simon Heaney, Drewry’s senior manager of container research, said the consultancy has now cut its growth forecast for global container port throughput to 1.8%, down from 2.2% in February.

“Any further escalation [in the conflict] could force a bigger downgrade,” Heaney said on Drewry’s webinar. “Port throughput growth could sink to between 0.5% and 1.3%, which comes after two years of very strong growth of 6%.”

And the logistics industry’s expectations for the peak season are pessimistic, to say the least, as a quote from the article would indicate:

“There may be a peak season, but I doubt it. If there is, it’ll be muted,” [Björn Vang Jensen, an Xeneta executive industry advisor and former logistics manager] said. “There will be service cancellations, blank sailings, [and] routing changes if the conflict drags on … the whole year is going to be a mess.”

Not as Bad as It Sounds

Still, it’s good to keep in mind that projections, especially as amplified in the media, tend toward the negative, particularly when they have political connotations, as these ones do. Fears of shortages will be, and are being, amplified. However, so far, there’s more handwringing over what may happen than actual happenings in the international shipping industry.

Services so far continue, the current shipping demand level hasn’t deeply faltered, and fuel shortages have not hit the industry. Szakonyi’s JOC article today, quoted earlier, is actually titled “Tighter bunker supplies raising costs, but not impacting service: ocean carriers.” Notice the effects of the Iran War, as compiled from carrier executives by Szakonyi, are limited to oil/fuel cost increases:

Container line executives on Tuesday acknowledged that bunker fuel supplies globally are tightening amid the war-driven energy shock, causing congestion at some fuel hubs and forcing some ships to bunker at alternative ports. But they stopped short of saying there were outright fuels shortages that were impacting services.

The tighter supplies are requiring more pre-booking work and coordination, but there haven’t been “shortages per se yet,” Fabio Santucci, president of Mediterranean Shipping Co.’s (MSC) US office, said at the Georgia International Trade Conference.

Stuart Sandlin, president of Hapag-Lloyd North America, concurred, adding that while rising fuel costs are a problem, “there weren’t any red flags yet.”

…

Ocean carrier executives said they haven’t seen a pullback in US importing since the war began, but noted 2026 would be a challenging year for volume with zero or minimal trade growth expected. US laden imports were down 5.2% year over year in the first quarter, according to PIERS, a sister product of JOC.com within S&P Global. Still, March imports of 2.33 million TEUs were the highest since last August.

With those higher fuel costs, shippers are paying more for their international shipping, but services continue as before. The cost increases wouldn’t be that different from a typical peak season. It’ll be interesting to see how and if typical peak season freight rate increases will happen this year, or if Vang Jensen is right that there won’t be a peak season or only a muted one at best.