LONDON: Iran’s closure of the Strait of Hormuz trade route in the Middle East war is raising the costs of shipping fuel and goods around the world, industry data shows.
Prices have risen due to falling capacity, and ships remain in the Gulf for fear of being attacked if they set sail. Other ships are taking long and expensive alternative routes to avoid the strait, while reduced oil flows have driven up the price of ship fuel.
“We’ve had to stop bookings… to and from the upper Gulf region because we can’t get ships in and out,” Rolf Habben Jansen, chief executive of major container shipping line Hapag-Lloyd, said last week, estimating that the war had increased costs by “$40, 50 million a week.”
“A big part of that is fuel prices, but also in categories like insurance or container storage and inland shipping, we’ve seen costs rise and we have six ships that we can’t use today, which reduces available capacity,” he told a news conference.
Here are five data indicators of how the crisis is driving up shipping costs.
Tanker rental
The cost of chartering a tanker multiplied after US and Israeli forces began attacking Iran on February 28, prompting retaliatory attacks across the region.
For a major Suezmax-class crude carrier, average “earnings” – a standard proxy for charter costs – have more than tripled since February 26 to more than $330,000 a day, according to maritime research group Clarksons.
For transporters of liquefied natural gas on a reference route between the United States and Japan, the measure also tripled in that period to $90,000 per day.
Oil shipment
The overall cost of shipping oil soared after the war broke out, said transportation pricing specialist Peter Norfolk of Platts, part of S&P Global Energy.
From $46 per metric ton in late February, the cost of shipping crude oil from the Gulf to China on a giant VLCC-class tanker nearly tripled in a few days, then declined to around $64 in late March, he said. AFP on Mondays.
“Of course, there are actually barely any uploads happening at the moment,” he noted.
About a fifth of the world’s crude oil and liquefied natural gas passes through the strait in peacetime.
Container costs
The benchmark spot price for shipping a 40-foot container has increased by 20 to 25% on major routes from the Far East to Europe and the US West Coast, according to consultancy Maritime Services International.
The price has reached between $2,200 and $2,700 for a 40-foot container on that European route, he said.
“War surcharges have caused rates from the Far East to the Middle East Gulf and Red Sea to increase by almost 200%” from February 20 to March 20, it said in a report.
“Traffic through the SoH (Strait of Hormuz) has been severely limited, with carriers suspending bookings, diverting vessels and offloading cargo at alternative safe regional hubs.”
Increase in fuel for boats
The price of fuel that powers ships nearly doubled after the war broke out, reaching a high of $1,053 per metric ton on March 20.
On March 31 it amounted to more than $936, compared to $540 on the eve of the war, according to market data from the financial platform Factset.
