The situation across Middle East shipping lanes has escalated sharply, with substantial operational, navigational, and insurance implications for global trade as a result of the military conflict in the region that began on 28 February.
A commentary issued by United Loss Adjusters & Surveyors (ULA), which has offices in London and Beirut, and global law firm Clyde & Co, said that Suez Canal transits are effectively halted, with ships rerouting via the Cape of Good Hope. This development accompanies Iran’s declaration that the Strait of Hormuz is “closed”.
The commentary added, "As with the Red Sea, 'closed' does not mean empty; it means high-risk with selective vessel passage."
Operational consequences to expect
Mainline carriers will increasingly discharge Gulf-bound cargo at regional hubs such as:
-
Salalah
-
Khor Fakkan
-
Sohar
-
Duqm
-
Colombo
Smaller, regional carriers may take over the final high-risk legs — echoing the “Red Sea workaround” of the past two years.
This will drive:
-
Severe port congestion in transshipment hubs
-
Spillover bottlenecks across Asia (Singapore, Tanjung Pelepas, Port Klang)
-
Soaring spot rates into the Gulf
-
Upward rate pressure across other deep-sea trades
Insurance impact: cargo & hull exposure
The situation substantially raises risk across both cargo and hull & machinery (H&M) exposure, the commentary added.
|
Cargo insurance implications:
-
Delay claims
-
General Average declarations
-
Deviation claims and partial discharge exposures
-
Increased exposure to war risks, strikes, and malicious acts
-
More scrutiny on:
-
Warranties
-
Applicable voyage clauses
-
Transit deviation conditions
-
Rising number of carriers invoking force majeure, liberty clauses, or safety-of-life-at-sea rerouting provisions.
Cargo owners and insurers should reassess:
-
Whether their policies adequately cover war risks, delays, and transshipment exposure
-
Potential exposure during off-terminal storage, unintended transshipment, or partial discharge
-
Contractual obligations (INCOTERMS, free time, demurrage, delivery deadlines)
|
|
Increased hull exposures:
-
Elevated risk of drone strikes, missile threats, and collateral damage
-
Heightened navigational hazards due to:
-
Rerouting via Cape of Good Hope
-
Crew fatigue and extended voyage durations
-
Weather exposure around southern Africa
-
Increased fuel consumption and machinery stress from prolonged detours
-
Higher probability of machinery breakdowns, propulsion issues, or bunker contamination due to route changes
|
|
War & Strikes covers:
|
Operational & claims considerations
Hull interests should review: