Update on Middle East Conflict | Impacts on international shipping
Middle East Market Conditions
The Strait of Hormuz remains effectively closed to normal commercial shipping due to security risks and soaring insurance costs. As a result:
- Major container carriers have stopped accepting new bookings for many Persian Gulf destinations.
- Vessels already en route face rerouting, uncertain discharge plans, delays and new cost recovery surcharges.
Most Asia–Europe and Asia–US East Coast services continue to avoid the Red Sea/Suez Canal, instead diverting around the Cape of Good Hope, resulting in:
- Longer transit times
- Equipment shortages
- Higher fuel consumption
While some ports (including Jebel Ali as of 1 March 2026) have resumed operations, the wider supply chain remains disrupted due to ongoing carrier booking suspensions, routing changes and surcharges.
Rising Bunker Fuel & Increased Ocean Freight Costs
Bunker fuel prices have surged:
- IFO380 heavy bunker: up to USD $841.50/tonne (from $456 in Feb 2026)
- VLSFO low-sulphur fuel: up to USD $929/tonne (from $556), with Singapore and Hong Kong exceeding USD $1,000/tonne
These increases are driving emergency fuel surcharges, higher FAK rates and Peak Season Surcharges across global trade—not only for Gulf-related cargo.
Carriers announcing cost increases include:
- Maersk: PSS + emergency rate hikes
- MSC: emergency fuel surcharges + higher FAK
- CMA CGM: new PSS on various Asia/EA/NA trades
- Hapag-Lloyd: emergency fuel surcharges + rate rises
Expect continued freight volatility across multiple lanes.
Carrier updates: MSC, Maersk, CMA CGM, COSCO, Hapag-Lloyd, ONE, Evergreen, Yang Ming.
Aviation & Air Cargo
Air freight has been severely disrupted, with effects now outpacing ocean freight:
- Around 21% of global air cargo moves through the Middle East.
- Asia–Middle East–Europe capacity is down 39% since the conflict began.
Market conditions include:
- Mass cancellation of passenger flights (loss of belly cargo space)
- Grounding or reduction of freighter aircraft
- Limits on courier/express services
- Longer transit times due to airspace closures
- Sharp rate increases, particularly for time‑critical cargo (pharma, perishables, spare parts)
More than 20,000 flights have been cancelled across Dubai, Doha and Abu Dhabi. Emirates has restarted some flights, but normal operations are far from restored.
Air freight is available but at higher cost and with lower reliability.
Domestic Australian Impact - Diesel & Transport Cost
The conflict is now impacting Australian domestic freight costs through rising fuel prices.
Based on CTAA and AIP data (4–10 March 2026), diesel Terminal Gate Prices increased 29–31% across major capitals:
- Sydney: 30.35%
- Melbourne: 29.22%
- Brisbane: 30.19%
- Adelaide: 30.67%
- Perth: 30.74%
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