Duration of Gulf Disruptions Deciding Factor for Freight Rates, Congestion

Insight Focus

Hormuz Causes Disruption

The Hormuz closure is causing regionalised congestion, particularly for South Asian exporters. Ports in India and Bangladesh are seeing backlogs, and yard density is rising at major transshipment hubs in East and Southeast Asia due to diverted Gulf‑bound cargo.

Some alternative ports are emerging as temporary transshipment hubs, such as Nhava Sheva in India. At this port, Xeneta notes that congestion has risen from 15% at the end of February to 55% by March 12. Pressure is also building at Port Klang and Tanjung Pelepas as cargo is diverted or staged for alternative Gulf routings. Reuters likewise reports Gulf importers are rerouting through ports such as Fujairah, Khor Fakkan and Sohar and then trucking inland, but those alternatives have less capacity and are already under strain.

However, some reports say these disruptions are far less severe than at the onset of the Red Sea crisis. According to Lars Jensen, CEO of Vespucci Maritime, a contraction in capacity through Hormuz is “definitely not pandemic scale — it’s also not even Red Sea scale.”

Source: Drewry

However, the extent of the disruption depends on how long the conflict lasts. With a prompt solution, there will still be bottlenecks and higher costs, particularly if shippers get jittery about a Red Sea return. Already, any tentative steps towards a return have been quashed, meaning a delay of at least six months – if the Iran conflict ends soon. A prolonged conflict could prompt the same phenomenon as the Red Sea, exacerbating shippers’ challenges, according to Jensen.

Red Sea, Gulf Disruptions Expand

The Red Sea/Suez crisis remains the central disruptor, but the situation has broadened materially. The Strait of Hormuz has effectively closed for normal liner planning, prompting major carriers to halt Gulf-region bookings, discharge cargo at alternative hubs, or pause services altogether. Maersk suspended its FM1, ME11 and Gulf shuttles, while OOCL and COSCO issued restrictions on Gulf calls, and MSC imposed the most sweeping booking freeze into the Middle East region.

Globally, more than 140 vessels and about 470,000 TEU are now trapped or circulating inefficiently due to regional conflict, adding to schedule unreliability and equipment shortages.

The constrained routing environment is also reinforced by lingering Red Sea risks: after more than two years of diversions via the Cape of Good Hope, carriers remain cautious about restoring full Suez transits despite early test voyages.

Source: IMF

Carriers Roll Out Network Cuts, Rerouting and Emergency Surcharges

Across the industry, carriers have responded with sweeping operational adjustments:

• Maersk: Beyond service suspensions, the carrier introduced substantial Emergency Contingency Surcharges (ECS) of up to USD 1,800/TEU and USD 3,000/FEU for Red Sea‑adjacent trades. It also introduced a Peak Season Surcharge (PSS) to Salalah effective March 10.

• CMA CGM: The most consequential development is that its Emergency Fuel Surcharge (EFS) applies globally, not just to Middle East routes. This has been announced as USD 150-180/TEU depending on dry or reefer cargo on long‑haul headhauls, and USD 75–90 on backhauls and intra‑regional trades from March 23.

• MSC: A full booking suspension into the Middle East has been imposed alongside fuel surcharges on Red Sea, East Africa and Indian Subcontinent lanes.

Industry‑wide, emergency fuel surcharges are escalating as oil prices rise due to the Strait of Hormuz closure and tanker flow constraints. Hapag‑Lloyd, CMA CGM, and MSC have issued EFS updates globally, pointing to a near‑term uplift in bunker‑related components in all‑in rates.

Rising Spot Rates Mask Weak Fundamentals

Despite the geopolitical chaos, underlying global supply–demand fundamentals remain soft. According to Xeneta and Bluspark analysis, much of the recent rate volatility is narrative‑driven rather than reflective of tighter markets.

Spot markets showed moderate climbs this month:

• Transpacific: Freightos Baltic Index rates rose by about 10% to USD 2,022/FEU, with East Coast levels reaching about USD 3,000/FEU.

• Asia–Europe: Rates increased by about 6% to around USD 2,600/FEU, and about 2% to USD 3,700/FEU into the Mediterranean.

But these increases are not fundamentally driven. Analysts note that post‑Chinese New Year seasonality and carrier‑imposed General Rate Increases (GRIs)—and now fuel surcharges—are pushing rates upward, even as the market remains structurally oversupplied. Total global capacity continues to grow faster than demand at about 3.6% vs. 3% in 2026.

Bluspark reports that actual transacted Transpacific FAK rates remain widely dispersed, often far below announced GRIs, at USD 1,800–4,000 depending on lane and carrier.

Long‑term contract markets show even clearer softness. As of the end of January, Xeneta data indicates Far East–Med long‑term rates are down 25% year over year to USD 2,308/FEU, with Far East–North Europe rates down 10% to USD 2,010/FEU, their lowest since 2023.

Structural oversupply remains the defining factor for freight pricing. A full reopening of the Red Sea could release 6–8% of global fleet capacity back into circulation as carriers return to shorter Suez routes. This would put additional downward pressure on rates.

And new vessel deliveries scheduled throughout 2026 will further increase global supply, irrespective of geopolitical bottlenecks.

Shippers are therefore advised to remain disciplined by verifying surcharges, avoiding long‑term commitments without flexibility and expecting that rate softening is likely if geopolitical tensions ease and carriers normalise networks.