Shipping industry set for tougher times ahead due to tensions in West Asia

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Shipping industry set for tougher times ahead due to tensions in West Asia

Logistics 15 Apr 2024 04:28 PM IST PTI

The global maritime industry is set for tougher and more challenging times after Iran ramped up West Asia tensions by launching an unprecedented drone and missile attack on Israel, causing supply chain disruption and increasing the probability of choking shipping routes, experts here have said. Iran's attack on Israel marks a distinct escalation in hostilities by bringing the two nations into direct conflict.

There is a concern about the probability of a Persian Gulf shutdown, though many maintain hope of defusing fierce tension in the region, a delegate at the opening of Singapore Maritime Week on Monday mentioned. The Persian Gulf is a Mediterranean Sea in West Asia. It is connected to the Gulf of Oman in the east by the Strait of Hormuz, one of the world's most strategically important choke points.

The diversion of each ship is estimated to cost $30 million through the Cape of Good Hope from the Suez Canal, according to Danish Sultan, managing director of PacMarine Services in Singapore. The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez and dividing Africa and Asia.

With 80-85% of the global cargo transported by ships, the shipping industry will have to go on in any environment, he pointed out. Shipping costs have already gone up by three to four times compared to pre-Covid level, Colin Er Wen-Jie, director of the transport department at the Sumitomo Mitsui Banking Corp said at the Singapore Maritime conference being held April 15-19 and being attended by over 10,000 delegates.

Supply chain disruption is certain though hope is being maintained that both Iran and Israel will not blow up the situation. Diverting a ship via Cape of Good Hope adds 12-13 days of additional journey compared with sailing through the Suez Canal, according to Sanjay Verma, director Decarbonisation Solutions for Marine at Wartsila.

The tonne mile increase will lead to a spike in shipping costs, he said, adding that it would add to pollution and deflate all efforts being made for managing the climate as more and more fuel will be burned. Commodity prices, including oil, will be spiked, Sanjiv Mishra, head of section, Date Centre Asia Maritime at the DNV. The global shipping industry is playing an important role in transporting 80-85% of the global trade, he stressed.

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Shipping industry set for tougher times ahead due to tensions in West Asia

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