Maersk Halts Gulf Cargo Bookings Amid Rising Insurance Costs From US-Israel-Iran War

(MENAFN- Khaleej Times) [Editor’s Note: Follow Khaleej Times live blog amid US-Israel-Iran war for the latest regional developments.]

Denmark’s Maersk has become the latest shipping company to temporarily suspend cargo bookings to and from several Gulf markets as conflict around the Strait of Hormuz disrupted key trade routes serving the region.

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Maersk posted on its website on Friday: "Following our latest risk assessment and operational review and considering the escalating conflict affecting safe navigation in the Gulf region, we have made the decision to temporarily suspend the FM1 Service (connecting Far East to Middle East) and as well the ME11 Service (connecting Middle East to Europe).

"This decision has been taken as a precautionary measure to ensure the safety of our personnel and vessels while minimising operational disruption across our wider network.

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We are closely monitoring the evolving security situation in the Middle East and would like to share an important update on our network coverage across the region."

Maersk and CMA CGM have earlier warned of rising operating costs, cargo restrictions and uncertainty across Middle East shipping corridors. The security risks in the region had forced the company to introduce an emergency freight increase across shipments moving to and from Gulf destinations.

The Danish shipping giant said the surcharge would amount to $1,800 for a 20-foot container, $3,000 for 40- and 45-foot containers, and $3,800 for refrigerated or special cargo containers. The increase applies to shipments linked to several destinations including the UAE, Qatar, Saudi Arabia, Bahrain, Kuwait, Iraq and Oman.

Escalating security risks

In the same notice, the company said vessels were currently unable to safely transit the Strait of Hormuz due to escalating security risks, adding that service flows across Middle East trade corridors had been significantly disrupted.

On March 3, Maersk said it had suspended the acceptance of refrigerated, dangerous and special cargo in and out of several Middle Eastern countries, including the UAE, Oman, Iraq, Kuwait, Qatar, Bahrain and Saudi Arabia, with exceptions only for essential goods such as food and medicines.

The advisory also said the company had halted new bookings between the Indian subcontinent - including India, Pakistan, Bangladesh and Sri Lanka - and Upper Gulf markets such as the UAE, Bahrain, Qatar, Iraq and Kuwait.

Another major global carrier, CMA CGM, also said in a customer advisory issued on March 2 that it would introduce an emergency conflict surcharge of up to $4,000 per container on shipments serving Middle East destinations.

Logistics operators say the impact is already being felt across export hubs supplying Gulf markets.

Mounting congestion

Indian media have also reported mounting congestion at export hubs. Reports said around 1,000 containers carrying food products for Middle Eastern markets are currently stuck at Jawaharlal Nehru Port in Mumbai, one of India’s largest gateways for Gulf-bound cargo.

A Mumbai-based freight forwarder whose clients export goods from Gujarat and Maharashtra to the Gulf said container shipping costs had surged dramatically.

“A 40-foot container that used to cost around $300 is now costing about $3,300,” he said.“Most of our shipments are destined for the UAE, Bahrain, Qatar and Iraq, so the disruption is hitting us immediately.”

He said exporters were struggling to plan shipments as vessels were being rerouted and sailing schedules reassessed.

“There is a lot of confusion right now. Shipping lines are reviewing sailings and some vessels are being pulled back while operators assess the risks,” he said.

The disruption is particularly worrying for exporters of agricultural produce heading to Gulf markets.

Another freight forwarder said the crisis coincides with a peak season for shipments of fresh produce from India.

“This is when grapes, bananas, onions and other agricultural products move in large volumes,” he said.“Perishable cargo is the worst affected because delays can quickly lead to losses.”

If the situation in the Strait of Hormuz remains uncertain, exporters fear the impact could intensify.

“If this continues, things could become very difficult for exporters,” he said.

Legal experts tracking maritime trade say the disruption is already affecting supply chains linked to Gulf markets.

Dr Sujay Kantawala, a customs and trade lawyer at the Bombay High Court, said the crisis has slowed cargo movement at several Indian ports.

“Trade has been severely affected and thousands of containers carrying edible goods meant for Middle Eastern countries are now stuck at Indian ports,” he said.

Freight costs, he added, have surged sharply, placing exporters under pressure.

“Shipping rates have shot up dramatically and many exporters are struggling to absorb the sudden rise in costs.”

The timing is particularly difficult as India’s mango harvest approaches.

“If shipping routes remain uncertain when the mango crop is ready, exporters may have no choice but to sell locally at distress prices,” Kantawala said.

He warned that the consequences extend beyond exporters.

“The entire ecosystem - farmers, transporters, warehouse operators and port workers - depends on this trade. When shipments slow down, thousands of livelihoods are affected,” he said.“The outlook right now is very uncertain."

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