Iranian blockade versus American blockade. The situation in the Middle East is getting bogged down as the warring partners compete to get the upper hand as peace talks struggle to make progress. Confusion is the main result, while more than 10,000 seafarers and some 600 ships, including a hundred or so container carriers, are still immobilised, waiting for a solution. On 5 May, eight members of the crew of the CMA CGM San Antonio were wounded after the vessel came under fire. The vessel continued on its route and the company immediately began rescue operations. A little earlier, it was reported that another attempt to get through the strait by the CMA CGM Saigon had succeeded without incident.
On the US side, the blockade is directed at particular targets and the US presence in the strait zone itself is limited. According to calculations by some experts, there are more vessels entering the Persian Gulf than there are leaving it, which is paradoxical, given that there is a double blockade in place. Iran is still managing to get vessels out, albeit in less than optimum conditions, via its territorial waters and those of Pakistan.
Container ship movements, on the other hand, are virtually non-existent, as replacement overland routes are used instead.
Illegal toll charges paid anyway
Taking advantage of the confusion, Iran is proceeding with its plans. On 18 May, the Iranian authorities announced that they were setting up the Persian Gulf Strait Authority to take charge of management of the Strait of Hormuz. Its exact responsibilities have not been set out in detail but, according to Lloyd’s List, it will have the task of regulating traffic and collecting fees from ships going through the Strait of Hormuz.
Shipping companies’ costs are soaring and freight rates are either stagnating or falling. As a result, even with the slight increase in cargo volumes most of them are registering, the shipping companies have begun the year in difficult conditions. The post-Covid recovery of 2021-2022, followed by the Houthi attacks in late 2023, have held up freight rates for some years despite the arrival of additional shipping capacity. Have we come now to the end of the “super-cycle”? Numerous analysts seem to be incorporating this view into their analyses and financial projections, as the threat of overcapacity is compounded by economic and geopolitical uncertainty.
(1) Excluding MSC, which does not publish its financial results ; (2) Q4 of fiscal year 2025–2026 – Sources: companies’ financial reports - © UPPLY
Prices
In this turbulent situation, the market is looking for direction. On the one hand, there is intense competition, which tends to force down freight rates in the final stages of the annual contract negotiating round. Many contracts have been left open, moreover, because of the current economic and geopolitical uncertainty. On the other hand, exceptional surcharges (for additional fuel, war risk and, in some cases, congestion costs) are boosting the final bill for shippers using the spot market and NAC quarterly rates(...)