Gulf freight rates jump as shipping companies turn to trucks to move cargo

{"text":[[{"start":10.9,"text":"Companies have warned of severe backlogs and extra charges, as shipping lines use alternative land routes to try to ease congestion caused by the near closure of the Strait of Hormuz."}],[{"start":21.5,"text":"Shipments bound for the Middle East at the start of the Iran war remain stranded in ports as far away as India and Mozambique, with businesses facing thousands of dollars in extra costs despite efforts by major shipping lines to find alternative routes."}],[{"start":36.5,"text":"Freight rates on the Shanghai to Gulf and Red Sea route hit record highs this week, surpassing even the peaks reached during the Covid-19 pandemic."}],[{"start":44.85,"text":"The cost to ship a standard 20ft container (TEU) on that route increased from $980 before the outbreak of the war to $4,131 in the week to May 15, according to data provider Clarksons Research."}],[{"start":59.85,"text":"The highest cost during the pandemic was $3,960 per TEU in 2021."}],[{"start":67,"text":"Much of the increase has been driven by fuel costs and the rush to find trucking capacity to transport cargo by road."}],[{"start":73.7,"text":"Vincent Clerc, chief executive of Maersk, the world’s second-largest container shipping company, told the FT that “significant trucking power” had been mobilised. “Both the Saudis and the Iraqis have opened up for a lot of trucks coming from Iraq, from Jordan, from Turkey even.”"}],[{"start":null,"text":"

"}],[{"start":90.6,"text":"All the major shipping companies including MSC, Maersk, CMA-CGM and Hapag-Lloyd have opened lorry routes from ports on the Red Sea and Gulf of Oman — including Yanbu and King Abdullah in Saudi Arabia and Fujairah in the UAE — to ports such as Dammam in Saudi Arabia, Basra in Iraq and UAE’s Jebel Ali, the region’s biggest hub."}],[{"start":115.44999999999999,"text":"But lorries can replace only a fraction of the capacity provided by the large container and cargo ships that previously served the Gulf through the Strait of Hormuz, which has in effect been closed to shipping since the start of the war on February 28."}],[{"start":130.64999999999998,"text":"Only a handful of ships have been able to pass through the waterway each day, down from about 135 daily transits before the war. About 38 ships have been attacked."}],[{"start":141.34999999999997,"text":"“The only way to get it in there is through land bridge . . . but of course the capacity of all those land bridges is a lot less,” Hapag-Lloyd chief executive Rolf Habben Jansen said in a recent company podcast."}],[{"start":null,"text":""}],[{"start":153.89999999999998,"text":"Trade flows into the Gulf region had fallen by between 60 and 80 per cent, he added. One shipping industry lawyer said ports were being forced to prioritise essential goods such as food and medical supplies."}],[{"start":166.39999999999998,"text":"The consumer products division of Indian conglomerate Tata said that tea, salt and pulses bound for the Middle East were now being shipped to ports such as Jeddah in Saudi Arabia and Khorfakkan in the UAE for overland transport."}],[{"start":181.45,"text":"“We have seen slower transit times and some congestion across regional ports,” said Tony Stubbs, senior VP of supply chains at Tata Consumer Products, adding that delays could reach up to 60 days. "}],[{"start":193.25,"text":"A London shipbroker said grain traders were also rerouting cargoes through Red Sea and Gulf of Oman ports before moving them onwards by truck and smaller vessels. “There’s been a rise in the amount of grain received at Fujairah and Khorfakkan, with trucking to major UAE ports and then distribution to Qatar, Bahrain and elsewhere in the Gulf on smaller vessels.”"}],[{"start":215.35,"text":"Rates on some Gulf routes have retreated from their early highs as demand has weakened. Shanghai to Jebel Ali rates quadrupled at the start of the war to more than $8,000 per 40ft container but have since fallen to about $5,700, according to shipping platform Freightos."}],[{"start":233.1,"text":"Christian Wendel, president of fertiliser trader Hexagon Group, said that for fertiliser, the scale of the rerouting posed major logistical challenges because export cargoes typically range from 30,000 to 50,000 tonnes, while the trucks carry about 30 tonnes each. "}],[{"start":251.04999999999998,"text":"“Logistically it’s a nightmare,” he said. "}],[{"start":null,"text":""}],[{"start":254.45,"text":"Suzie Skipper of pricing agency Argus said Saudi Arabia companies such as SABIC Agri-Nutrients and Maaden were trucking urea cargoes for fertiliser production for 14 to 15 hours across the country by road. Argus estimates this adds $80-$90 a tonne in transport costs. "}],[{"start":272.84999999999997,"text":"David Ozard, general manager of removals group John Mason International, said the company still had six containers stranded that had been shipped before the war began."}],[{"start":282.29999999999995,"text":"Capacity at the ports now being used for land bridges was tight, he said. “The backlog is going to be horrendous. Assuming they can clear it out, it will take months.”"}],[{"start":292.34999999999997,"text":"One car industry executive said his company still had shipments destined for the Middle East in Mozambique and Sri Lanka."}],[{"start":299.7,"text":"The disruption is also affecting food aid. The World Food Programme said some shipments sent before the war were still in transit, and that it was struggling to reach countries such as Yemen and Djibouti because of the added threat of Houthi attacks in the Red Sea."}],[{"start":314.65,"text":"One aid shipment to Sudan arrived 62 days late after being rerouted around the Cape of Good Hope, while Afghanistan has also become harder to reach, said the WFP’s director of supply chains, Corinne Fleischer."}],[{"start":327.5,"text":"Before the war, the WFP sent aid into Afghanistan through Iran. Its latest consignment crossed nine countries by land, from the UAE to Azerbaijan and then across the Caspian Sea to Turkmenistan, arriving 43 days late."}],[{"start":344.25,"text":"Cartography by Cleve Jones"}],[{"start":354.75,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778997358_4885.mp3"}