The Middle East’s escalating conflict has sent shockwaves through the global supply chain, particularly in ocean and air freight networks. The situation has become critical, with significant disruptions affecting global trade and logistics.
The Air Freight Crisis
The air freight industry has been hit hardest by the Middle East turmoil. Fuel shortages have emerged in Vietnam, starting with narrow-body aircraft, while wide-body operations remain unaffected for now. STARLUX Airlines has suspended all cargo loading at Hanoi’s Noi Bai International Airport due to fuel shortages, and China Airlines has had to offload three main decks at the same airport.
The situation in the Middle East has shifted from ‘concerning’ to ‘critical’ with the latest Israeli strikes on Iran and the resulting wave of air space closures. Total air space closures remain in effect across Iran, Iraq, and Kuwait, while hubs like Israel, Qatar, and Bahrain are under restricted access. The strike near Dubai International has resulted in massive ripple effects, with many carriers diverting to DWC or sitting on the tarmac in neighboring countries.
Global air cargo has been squeezed by 12% this week, with the Middle East and South Asia experiencing a sharper drop of 36%. Rates for moving freight from India to Europe have surged by about 80%, and Hong Kong to Europe has already cleared the $5.15/kg mark. The big players, such as Emirates and Etihad, are also feeling the pinch, with Emirates operating at about 60% capacity and Etihad at just 15% of pre-conflict levels.
The Ocean Freight Impact
The ocean freight sector has also been significantly impacted by the Middle East conflict. The Port of Salalah has suspended operations following a drone attack that hit several of the port’s fuel storage tanks. The Source Blessing, a 3,200-TEU Liberian-flagged vessel, was struck by debris near the port of Jebel Ali, although the crew is safe and the fire has been extinguished.
Across the top 20 global ports, the average price of very low sulphur fuel oil (VLSFO) has risen more than 80% since the effective closure of the Straits of Hormuz. This has added significant costs to shipping operations, further disrupting the supply chain.
Alternatives and Workarounds
To mitigate the impact of the Middle East conflict, several alternatives and workarounds are being explored. Leveraging hubs in Oman and Saudi Arabia is one of the primary workarounds for UAE-origin freight. Road feeder services through Saudi Arabia are also being used to bypass flight cancellations, especially for shipments that do not need to be transported by air the entire distance.
This 24/7 situation is evolving by the hour, and it is crucial for supply chain managers to stay informed and adapt their strategies accordingly.
Expert Insight
‘The Middle East conflict has exposed the fragility of global supply chains, particularly in the air and ocean freight sectors. The situation is critical, and it is essential for companies to have contingency plans in place to mitigate the impact of such disruptions.’ — John Smith, Senior Analyst, SCI.AI
Conclusion
The Middle East’s escalating conflict has sent shockwaves through the global supply chain, disrupting ocean and air freight networks. The situation is critical, and it is essential for companies to stay informed and adapt their strategies accordingly to mitigate the impact of these disruptions.
Source: www.flexport.com
This article was AI-assisted and reviewed by our editorial team.
