Exporters fret as Mideast tensions cast shadow on shipping operations

The military strikes by Israel and the United States against Iran, which have intensified tensions in the Middle East, particularly near the Strait of Hormuz, have disrupted shipping operations, creating uncertainty for Chinese exporters and pushing up freight rates as some carriers introduce extra charges on cargo bound for the region.

The Strait of Hormuz connects major energy producers and consumer markets across the Middle East, Asia and Europe. For Chinese exporters, it is a vital corridor linking China with Gulf markets while also serving global trade routes to Europe and beyond.

In Ningbo, East China's Zhejiang province, a shipment of washing machines bound for the Middle East was abruptly halted earlier this week after shipping schedules changed at short notice, forcing a local exporter to suspend loading and await further instructions.

Zheng Renfan, head of production at Ningbo Xinle Household Appliances Co, said three containers had already been loaded when the company received a notice that the vessel schedule had been altered.

The cargo was subsequently unloaded and sent back to the warehouse. About 95 percent of the company's products are exported, with roughly 30 percent destined for the Middle East, Zheng said.

As several major shipping lines, including Denmark's Maersk, Switzerland's Mediterranean Shipping Company and France's CMA CGM, have suspended bookings or restricted certain cargo shipments to the Middle East since Sunday, carriers that continue to operate in the region have begun levying emergency conflict surcharges and war risk premiums.

According to a report released by Ningbo Customs on Monday, some insurance companies have also informed shipowners that coverage for vessels transiting the Strait of Hormuz will be withdrawn, while premiums could rise by as much as 50 percent.

For a vessel valued at $100 million, the insurance cost per voyage could increase from $250,000 to $375,000, the report showed.

Xu Qi, manager of Middle East routes at Ningbo Port Southeast Logistics Group Co, a Ningbo-based international freight forwarding company, said the sharpest increases are on Middle East and Red Sea routes, where rates could rise by about $2,000 per twenty-foot equivalent unit (TEU) and around $3,000 per forty-foot equivalent unit (FEU).

Xu said that India routes have also seen gains, while Europe and US routes are likely to feel a ripple effect, with increases of roughly $500 to $1,000 per container.

Qian Hanglu, an analyst at Ningbo Shipping Exchange, said restrictions in parts of the Middle East have limited the release of shipping capacity, which could tighten global vessel and container supply. Under current circumstances, shipping lines are likely to maintain the detour arrangements.

"Compared with previous routes, the detour around the Cape of Good Hope in South Africa could add about 20 days to a round-trip voyage from Ningbo or Shanghai to Europe, increasing transportation costs and extending liner shipping cycles by several hundred US dollars per container," said Qian.

Hu Jiacheng, president of Shenzhen Baiancheng International Logistics Co, said the situation has already affected the company's operations, with some air cargo routes to the Middle East currently suspended and major shipping lines issuing notices of service suspensions.

Shenzhen Baiancheng is a freight forwarding company, based in Shenzhen, South China's Guangdong province, that specializes in logistics services on Saudi Arabia-dedicated routes.

"Fortunately, thanks to early preparations, most of the company's large shipments had already been dispatched before the Spring Festival holiday. Inquiries from clients have surged over the past few days, prompting the firm to issue an official notice addressing the situation," said Hu. "Our priority now is to activate contingency plans."

As maritime transport faces disruptions, he said the company's backup plan is to first ship cargo to ports in neighboring countries before arranging relay transshipment.

"We can route shipments to Pakistan's Gwadar Port by land transport first, and then move the cargo onward via feeder vessels or other transport options," Hu added.

zhongnan@chinadaily.com.cn