Gulf states are heavily reliant on imports. Trucking demands surge as smaller ports face congestion and delays. Reroutes and workarounds are adding to expenditure. Ports outside the Hormuz Strait under attack
Importers across the Gulf are scrambling to secure alternative routes for the movement of vital goods. This applies to everything from food to medicines and factory supplies. The effective closure of the Hormuz Strait blocks ports in a heavily import-dependent region.
The halt to commercial navigation through the critical Hormuz shipping chokepoint, brought on by the US–Israeli war on Iran, has also disrupted crude oil exports of Gulf nations.
The Hormuz closure is also compelling a rapid and costly supply chain rethink. This is to sustain the flow of essential imports. Logistics companies are racing to overcome the headaches of changing vessel destinations, which include finding alternative routes and managing increased shipping costs. Additionally, logistics companies are focused on moving goods overland and preventing perishable items from spoiling.
Ronan Boudet, the head of containers at data analytics firm Kpler, anticipates a dramatic surge in the price of supplies. Trucking from any port to Dubai would likely be multiple times the price of comparative ocean freight.
Crisis leads to destination diversions and overland routes
As of Saturday, 28 February, just before the war erupted, Kpler disclosed that 81 container vessels were heading for ports inside the Strait of Hormuz. Since then, 43 of these stranded vessels have rerouted to other Gulf ports, with the remaining 38 diverted away from the Gulf region entirely.
The arid climate necessitates the importation of most of the Gulf’s food. Around 70% moves through the Strait of Hormuz and onwards to major ports like Dubai’s Jebel Ali.
The blockage has affected all imports. This includes consumer and industrial goods. Food supplies are particularly vulnerable.
Citing an example, Christopher Belloc of the French fruit and vegetable industry association Interfel highlighted shipments totalling around 5,000 metric tonnes of French apples, which were bound for Dubai, currently being stuck in transit.
Belloc went on to share that the goods were hit with a USD 1 million (€900,000) maritime surcharge during the initial days of the war. Exporters, including Belloc’s own company, Blue Whale, are now attempting to divert to alternate seaports.
That may not be easy, as the shipment’s phytosanitary paperwork is tied to the original destination country. Belloc added that there is little choice.
Belloc added that he was dealing with perishable goods, so he could handle only a 15-day delay but not much more.
Cargoes are being diverted to ports outside the Hormuz Strait, like Fujairah and Khor Fakkan in the UAE, besides Oman’s Sohar, using trucks to move containers to their original destinations.
Those smaller ports lack the capacity of larger facilities, like Jebel Ali, thus creating delays.
CEO of logistics company TruKKer, Gaurav Biswas, said that port operators are responding with additional gate lanes, and operating hours are being extended. However, there is congestion, so clearance times have increased.
To cope with the surge in demand for ground transportation, TruKKer intends to scale up from 60 daily truck moves by over 800% to 500 moves daily.
Extra border checks are holding up cross-border shipments, causing heavier-than-normal loads to take longer to clear, according to Biswas. The company has increased prices by 5% to 15% on Saudi-bound routes. The rise is due to higher fuel costs, extra complexity and strong demand.
No safe port from the storm
Though unaffected by this Hormuz closure, regional ports outside the strait remain vulnerable.
The port of Fujairah handles containers while also being home to a major crude oil export terminal, which has come under repeated Iranian attack. Iran has also targeted Oman’s Duqm and Salalah ports.
Companies are likely to face further delays, besides even higher costs, should alternative routes shut down. So said a supply-chain manager at a fast-moving consumer goods firm.
