The closure of the Strait of Hormuz has had profound effects on the trade and supply chain of the Gulf states. David, a British trader who started his business in Dubai, is facing serious challenges in sourcing goods, and transportation costs have risen significantly. This year, he has spent up to $10,000 to transport a 40-foot container from China to the UAE, while this cost was only $1,250 before the closure of the Strait of Hormuz.
Increase in Costs and Supply Time
Reports indicate that marine insurance costs for each container have also seen a significant jump, rising from $120 to $1,000. Transit time from China to the UAE has doubled, reaching 60 days. David states, "Market demand is good, as long as the goods reach the port. Getting the container to the UAE has now become a nightmare."
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Impact on Exports and Imports
Alongside oil, the Gulf is recognized as a primary source of LNG, refined fuels, petrochemicals, and raw materials for chemical fertilizers. However, due to high transportation costs and insecurity in the Strait of Hormuz, exports of these products have significantly decreased. Qatar, one of the largest exporters of liquefied gas in the world, has exported only small amounts of LNG since the war began. This situation has led to a reduction in the export of limestone, sulfur, and other agricultural products.
According to an analytical institute, from March 1 to September 7 of this year, only 240 container ships have entered the Gulf, representing a 94% decrease compared to last year. Of the 99 active container lines before the war, only 11 services remain.
Logistical Challenges
Changing transportation routes due to the closure of the Strait of Hormuz has created serious challenges for shipping companies. Maersk and Hapag-Lloyd have turned to costly land routes, which adds additional expenses. According to Tobias Meyer, CEO of DHL, replacing a 20,000-container ship requires 10,000 trucks or 4,000 cargo plane flights, which is logistically impossible.
Jebel Ali Port in Dubai, the ninth busiest port in the world with a daily unloading capacity of 40,000 containers, has been cut off from the global network due to the closure of Hormuz, and Khor Fakkan Port on the eastern coast of the UAE is currently unable to handle the volume of cargo due to infrastructure limitations.
This situation has led to a continuous decline in trade flow and the erosion of Dubai's and the region's commercial position, posing a serious threat to the economies of the Gulf states.
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