Logistics Summary: Fuel And Capacity Impact From Iran Conflict

More than three weeks into the Middle East conflict, the situation continues to evolve rapidly, with mounting pressure on global supply chains.

The most immediate impacts are being felt in fuel pricing and air freight capacity, both of which are driving wider disruption across transport networks.

Air Freight
Air cargo operations have experienced the most significant disruption so far. Major transit hubs in the Gulf—including Dubai, Abu Dhabi, and Doha—are barely operating, affecting critical Asia–Europe routes. Airlines are facing higher fuel costs and reduced regional access, forcing them to reroute flights and limit available capacity. As a result, freight rates have risen and spot pricing has become increasingly unpredictable. Continued network adjustments by carriers are likely to sustain this volatility in the near term.

Ocean Freight
Maritime trade has also been affected, particularly following the closure of the Strait of Hormuz, which has severely restricted vessel movements in and out of the Gulf. Although base freight rates have not yet surged on global markets, increasing bunker fuel costs are beginning to place upward pressure on key shipping lanes. The Asia–Europe corridor remains relatively insulated due to prior rerouting strategies around Africa. However, with rates having been low, carriers are now pushing for General Rate Increases (GRIs), signaling a potential rise in costs in the near future.

Road Transport
Rising fuel prices are feeding directly into road transport costs. In the UK, diesel prices have climbed sharply, leading to immediate increases in fuel surcharges across both domestic and international transport.

Insurance
Insurance conditions have tightened considerably, particularly for shipments involving the Gulf region where war risk coverage is becoming increasingly limited, with some insurers withdrawing entirely from the market. On a global level, premiums are rising and policy terms are becoming more restrictive. Businesses should review their coverage as a priority to ensure they remain adequately protected under current conditions.

For further information or support, please contact a member of the Croft Cargo team.

‍