Third-Party Shipping Is Dead. Reroute Now or Get Left Behind.
The era of cheap, predictable global freight is over. Not paused. Over.
- War risk insurance for Strait transits is running 3-8% of hull value — 12 to 32 times peacetime rates. Over 600 vessels remain trapped in the Gulf.
- Asia-Middle East air cargo capacity is down 40-60%; South Asia-Europe rates are up 62%. Diesel is up 41% since March.
- Carriers are rewriting summer schedules based on a closed Strait, not an open one. Your Q3 ocean budget is obsolete.
Let me be direct about what has happened to the global freight market in the past eight weeks, because most logistics planning functions are still working from assumptions that expired in February. The era of cheap, predictable global freight is over. War risk insurance for Strait transits is running at 3-8% of hull value — 12 to 32 times the peacetime rate. For a VLCC, that is millions of dollars per voyage in insurance alone, before the Cape of Good Hope reroute, which adds 10-14 days and approximately $1.2 million in additional steaming costs per vessel. Over 600 vessels remain trapped in the Persian Gulf. The US Navy is turning back ships in the Indian Ocean headed for Iranian ports. Iran is seizing vessels without explicit permission. Carriers are rewriting their summer schedules based on a closed Strait, not an open one.
“The Strait is not reopening this month. Plan accordingly.”
Here's what that means for each mode. Ocean: your Q3 ocean freight budget is obsolete — reroute via the Cape now, and lock in war risk insurance early since rates will only rise as the backlog grows. Air: Asia-Middle East air cargo capacity is down 40-60%; rates on South Asia to Europe lanes are up 62%; European airlines have cancelled thousands of flights, and jet fuel surcharges are becoming a permanent structural cost. Rail: trans-Caspian China-Europe routes are at capacity, lead times stretched from 18 to 25+ days. Trucking: diesel is up 41% since March, with US retail diesel at $5.64 per gallon, the highest in real terms in two years. The companies that will come through this are the ones making hard decisions now, applying exactly the Foresight Over Reaction discipline — not the ones waiting for the Strait to reopen. The IEA's 32 member countries have released 400 million barrels from strategic reserves in an attempt to stabilise prices; that's a one-time intervention that doesn't move one barrel through the Strait.