Middle East: Escalating Conflict Disrupts Global Supply Chains

Since hostilities broke out across the Middle East this weekend, logistics networks have been significantly disrupted both within the region and globally.

Ongoing instability is likely to place further pressure on supply chains and increase costs. Below is a summary of the current situation — which remains highly fluid — and the potential knock-on effects.

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Air Freight

• Most Middle Eastern airspace is currently closed, severely disrupting flight operations to and from the region.
• The majority of airlines have suspended services in and out of the danger area, with operations largely limited to evacuation flights departing the region.
• Airspace closures and service suspensions have also affected long-haul routes that typically transit regional hubs, resulting in cancellations, diversions, congestion, and a reduction in available global air freight capacity.
• Delays are unavoidable, and operational backlogs are expected once restrictions are lifted.
• Air freight rates, including services from Asia, are already increasing sharply.
• Additional surcharges — such as war risk and fuel surcharges — may soon be introduced across many international air freight services.

Ocean Freight

• The Strait of Hormuz is effectively closed, with carriers cancelling services through the strait and directing vessels to hold position or seek shelter.
• Some carriers have suspended broader services to and from the Middle East.
• Multiple shipping lines are applying significant war risk surcharges on cargo moving to and from the region.
• Carriers that had recently resumed limited transits via the Suez Canal have announced renewed diversions around the Cape of Good Hope.
• Disruptions are likely to impact adjacent trade lanes, particularly Asia–Europe services.
• Global ocean freight rates may rise, especially if the conflict persists and fuel prices continue to increase.

Croft Cargo is closely monitoring the situation, which remains highly dynamic, and is working proactively to mitigate disruption wherever possible.

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