LONDON: Iran’s closing of the Strait of Hormuz trade route in the Middle East war is raising the cost of shipping fuel and goods around the world, industry data shows.
Prices have risen due to declining capacity, with ships being put into the Gulf for fear of attack if they set sail. Other ships take long, expensive alternative routes to avoid the strait, while the reduction in oil flows has raised the price of the boats’ fuel.
“We’ve had to stop bookings… to and from the upper Gulf region because we can’t get the ships in or out,” Rolf Habben Jansen, chief executive of container shipping giant Hapag-Lloyd, said last week, estimating that the war had driven up costs by “$40, 50 million a week”.
“A big part of that is bunker fuel prices, but also in categories like insurance or container storage and land transport we’ve seen costs go up and we have six ships that we can’t use today, which reduces the available capacity,” he told a news conference.
Here are five data indicators of how the crisis is driving up shipping costs.
Tank charter
The cost of chartering an oil tanker multiplied after US and Israeli forces began attacking Iran on February 28, prompting retaliatory strikes across the region.
For a large Suezmax-class crude carrier, average “earnings” – a standard proxy for charter costs – have more than tripled since February 26 to over $330,000 a day, according to maritime research group Clarksons.
For LNG carriers on a reference route from the US to Japan, the measure also tripled during that period to $90,000 a day.
Oil cargo
The overall cost of shipping oil skyrocketed after the war broke out, said freight pricing specialist Peter Norfolk at Platts, part of S&P Global Energy.
From $46 per metric ton at the end of 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 settled at about $64 at the end of March, he said. AFP on Monday.
“Of course, there is virtually no loading at the moment,” he noted.
About a fifth of global crude oil and liquid natural gas pass through the strait in peacetime.
Container costs
The spot reference price to ship a 40-foot container has increased by 20 to 25% on the main 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 the Europe route, it said.
“War surcharges have caused rates from the Far East to the Middle East to the Gulf and Red Sea to rise by nearly 200%” from February 20 to March 20, a report said.
“Traffic through the SoH (Strait of Hormuz) has been severely restricted, with airlines suspending bookings, diverting ships and offloading cargo at alternative safe regional hubs.”
Ship fuel increase
The price of bunker fuel that powers ships nearly doubled after the war broke out, peaking at $1,053 per barrel. ton on March 20.
It stood at more than $936 on March 31 – up from around $540 on the eve of the war, according to market data from financial platform Factset.
