Supply chains are adapting to a new reality in the Middle East

The latest escalation between the United States and Iran has reversed the tentative recovery seen across Gulf supply chains earlier this summer.

Commercial shipping through the Strait of Hormuz remains severely constrained, attacks on merchant vessels have resumed and the security risk has expanded into the Red Sea and Bab al-Mandab, creating a much broader challenge for international trade.

While the Strait of Hormuz remains the focal point, the disruption is no longer confined to a single maritime chokepoint. Carrier diversions, changing port strategies and higher fuel and insurance costs are now influencing freight movements across the Gulf Cooperation Council (GCC), with consequences extending well beyond the Middle East.
Saudi Arabia's suspension of onward GCC transit container movements through Jeddah has reduced the effectiveness of one of the region's principal distribution gateways.

Carriers are instead redirecting cargo through King Abdullah Port, Dammam, Fujairah, Khor Fakkan, Sohar and Salalah, using a combination of direct calls, feeder services and inland transport to maintain cargo flows.

These alternative gateways remain operational, but they are also absorbing significantly higher cargo volumes. The result is a redistribution of congestion rather than its elimination, with growing pressure on port capacity, trucking availability and border processing across the wider Gulf region.

For shippers, the key question is no longer whether a port is open. It is whether that port can accept a particular commodity, secure onward transport and complete delivery within the required timeframe.

Carrier networks are becoming increasingly fragmented

Some lines are moving existing Jeddah cargo through King Abdullah Port, while others are relying on Dammam as a feeder gateway or diverting shipments via Oman and the UAE.

Hazardous cargo presents an additional challenge, with several alternative gateways restricting dangerous goods, further reducing routing options for certain commodities.

This means two containers travelling between the same origin and destination may experience entirely different transit times, routing, costs and operational risks depending on the carrier selected.

Historic service patterns are therefore becoming a much less reliable guide to current network performance.

Bills of lading become even more important

The legislation also introduces new requirements covering cargo carried on deck. Where containers are stowed above deck rather than within the vessel's holds, this must now be identified on the bill of lading. Failure to do so could result in carriers losing important legal protections if claims arise.

While the requirement appears straightforward, implementing it may prove considerably more challenging.

Container stowage is often confirmed after shipping documentation has been prepared, meaning carriers and NVOCCs may need to redesign documentation processes and improve the flow of operational information between terminals, stevedores and documentation teams.

Fuel costs continue to reshape freight markets

The conflict is also reinforcing a higher cost environment across global logistics.
Following renewed hostilities, very low sulphur fuel oil prices in Singapore have risen by around 24% since early July, while marine gas oil has increased by approximately one-third. Similar increases have been recorded in Rotterdam, reversing much of the decline seen during the June ceasefire.

Shipping lines have responded by introducing emergency bunker surcharges alongside traditional bunker adjustment factors, while war-risk premiums remain elevated for Gulf and Red Sea services. These additional costs are flowing through international supply chains regardless of whether freight rates themselves are rising or falling.

Air cargo recovery has stalled

The impact extends beyond ocean freight. European aviation safety guidance continues to recommend avoiding or exercising heightened caution across airspace covering Iran, Iraq and Lebanon, while conditions affecting Bahrain, Kuwait, Qatar, the UAE and Oman remain under constant review.

Airlines continue to operate, but longer routings around restricted airspace are increasing flight times, fuel consumption and crew costs, reducing aircraft productivity on Europe-Asia services.

Capacity therefore remains available globally, but much less evenly distributed across affected trade lanes.

Short-term outlook

There is little indication that operating conditions will improve quickly. Security concerns remain across both the Strait of Hormuz and Bab al-Mandab, while insurers continue to maintain elevated risk assessments. Carrier caution, emergency fuel surcharges and changing routing strategies are therefore likely to remain features of the market throughout the coming weeks.

For businesses trading with or through the Middle East, flexibility, early planning and end-to-end supply chain visibility will remain critical until stability returns.

Logicall helps customers respond to rapidly changing market conditions through proactive shipment planning, multimodal routing, customs support and end-to-end supply chain visibility. As geopolitical events continue to reshape international freight markets, our specialists work closely with customers to minimise disruption and keep cargo moving.