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According to a report published by Allianz Research, approximately 1,150 cargo-carrying vessels with a combined vessel and cargo value estimated at $125 billion remain stranded or delayed following the closure of the Strait. The affected fleet represents around 29 million gross tonnes of cargo and involves as many as 20,000 seafarers awaiting the resumption of normal shipping operations.

Although a preliminary agreement between the United States and Iran has raised hopes that maritime traffic may gradually resume, we expect that the reopening of the Strait alone will not immediately restore normal operations. Strong assurances regarding the safety of crew, vessel and cargo will be required before shipowners and operators are willing to return to pre-conflict traffic levels. The situation continues to have important implications for global supply chains. We continue to monitor developments closely as shipping lines assess when and how normal routing patterns can be restored.

Industry analysts have also warned that restoring confidence and clearing the accumulated vessel backlog may take considerable time, even if the Strait of Hormuz reopens fully. The market disruption cannot be reversed overnight, even in the event of a sustained ceasefire. A recent memorandum of understanding between the United States and Iran, provided for a 60-day ceasefire and the reopening of the strait while negotiations on a broader settlement continue.

We expect that at best, container shipping capacity through the Strait of Hormuz may not return to normal levels before the end of the year, assuming that a lasting agreement on peace in the region is reached. The fragility of the situation has been confirmed once more as evacuation operations through the Strait of Hormuz have been paused following this week’s attack on a containership in the besieged waterway.

Source: CLECAT