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International shipping could soon feel the effect of a container ship hit in the Strait of Hormuz. On March 4, the Safeen Prestige vessel was hit by a projectile passing through the strait near Oman. The attack occurred just above the waterline, sparking a fire in the engine room. No injuries were reported from the attack, and the Omari navy rescued all 24 crew members. The situation is part of an ongoing Iran-Israel conflict, which has escalated in the last few days with US involvement. This article explains the potential impact of this situation on global trade and how to navigate the disruptions.
Responsible for nearly 20% of the world’s oil and liquefied natural gas (LNG), the Strait of Hormuz is a significant waterway for global trade. Along with oil, shippers use this waterway as a shortcut to transport goods such as sugar, aluminum, and fertilizers. The strait had been operating at limited capacity since the recent conflict, and the attack further shut down operations. Currently, around 138-147 container ships are trapped west of the strait, totaling approximately 470,000 TEUs (Twenty Foot Equivalent). The Safeen Prestige is said to be the first vessel targeted, with security analysts reporting that number currently at five. With only a few days into the crisis, there is a fear that congestion will continue to escalate.
The impact of the attack on the Strait of Hormuz has already begun, with shipping lines rerouting to avoid potential attacks. Rerouting could disrupt supply chains, including longer shipping times and higher costs for shippers. To prevent delays, shippers have begun switching to air as their primary mode of transport. However, various Middle Eastern airspaces are closed or operating at limited capacity, leading some carriers to suspend specific services. In turn, this could lead to further shipment delays, impacting numerous supply chains. A shutdown of the Strait of Hormuz and nearby airspaces may also reduce global capacity on key trade routes. Shipper can prevent potential bottlenecks by shipping cargo to and from other countries unaffected by the conflict.
During this time, you must protect your cargo, especially amid an ongoing conflict. Although the situation should not halt cargo movement, shippers should take the appropriate measures to prevent disruptions. Along with the ways mentioned in the article, speaking with a 3PL provider like A1 Worldwide Logistics is also beneficial. A 3PL (Third-Party Logistics) is a company that handles parts of a client’s supply chain on their behalf. These may include freight forwarding, customs clearance, warehousing, and domestic shipping. 3PLs also provide consultation to navigate situations that can disrupt shipping. Reach us at info@a1wwl.com or 305-912-0631 to speak to a 3PL regarding ensuring a successful international shipment.
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