The world's shipping industry has called on the United Nations to provide military protection for vessels operating in the Middle East after the latest seizure of a container ship by Iran, although much commercial traffic between Asia and Europe has already been re-routed around Africa.
ADVERTISEMENTThe seizure by Iranian forces of a Portuguese-flagged container ship as it left the Persian Gulf has prompted global shipping companies to demand the United Nations provide increased military protection, with shippers already having been forced to take lengthy detours to maintain European trade flows amid the intensifying conflict in the wider region.
Iranian Revolutionary Guards in the Strait of Hormuz seized the MSC Aries on Saturday morning (13 April), increasing unease within a shipping industry that has found itself in the crossfire of tit-for-tat hostilities in the Middle East, and prompting Portugal’s foreign ministry to summon Tehran’s ambassador three days later to demand the release of the ship and crew.
“We have seen a worrying increase in the attacks on shipping,” runs the letter to UN secretary general Antonio Guterres, made public today (April 19) and signed by the UK-based World Shipping Council, the European Community Shipowners’ Association (ECSA) and over a dozen other industry groups.
“The world would be outraged if four airliners were seized and held hostage with innocent souls onboard,” the letter continues. “Regrettably, there does not seem to be the same response or concern for the four commercial vessels and their crews being held hostage,” it states in reference to other vessels seized by Iran in recent months.
The ECSA told Euronews that the intensifying conflict in the region had already led to certain increased shipping costs and jeopardised European trade flows.
“The situation in the region continues to put our seafarers in danger and is increasingly impacting Europe’s supply chain and overall economic security,” secretary general Sotiris Raptis said. “It is essential to safeguard the safety and well-being of our seafarers and to protect key shipping routes and the international principle of freedom of navigation," he added.
The ECSA welcomed the decision in February to deploy the EU’s naval force to the region in an operation dubbed Aspides, after several months of Yemeni Houthi rebels targeting vessels in the Red Sea, the Gulf of Aden and the Arabian Sea. “We continue to encourage all coordinated efforts, including diplomatic, that can contribute to the de-escalation of the crisis in the area,” Raptis said.
Now Israeli military strikes inside Iran have further raised tensions in the region, with recent moves by Tehran stoking fears that the Strait of Hormuz, the gateway to the petroleum-rich Persian Gulf, could become a choke point for global oil supply, with potential knock-on effects on the wider economy.
Some 20 million barrels or about a fifth of the world’s oil supply pass daily through the only connection between the Persian Gulf and global trade routes, analysts at ING Global Markets Research said in a note published on 18 April. “Tensions have already been reflected in somewhat higher oil prices, with a large risk premium already priced in before last weekend,” the ING note stated. “This could easily lead to supply concerns should the situation escalate.”
In an advisory note issued this morning (19 April), the United Kingdom Maritime Trade Operations (UKMTO) warned vessels crossing the Arabian Gulf and western Indian Ocean of a potential increase in sightings of unmanned aircraft, or drones, although it said there appeared to be no imminent threat. “There are currently no indications commercial maritime vessels are the intended target,” noted the UKMTO, an information service for global shipping run by the Royal Navy, while requesting captains to report any “suspicious activity”.
For some cargo shippers, however, the impact of the latest developments appears to be limited by the fact that much of the trade flow between Asia to Europe has already been diverted away from the Red Sea and the Suez canal. Maersk, a Danish container shipping firm that vies with the Mediterranean Shipping Company (MSC) for the title of world’s largest, stopped using the shortest route to the EU market on 2 January, three days after Houthi forces attacked the container ship Maersk Hangzhou, prompting an intervention by the US military.
“It’s a longer journey, so you need more fuel and more vessels to keep the weekly sailings,” Maersk spokesperson Rainer Horn told Euronews of the firm’s decision to re-route vessels round the Cape of Good Hope. But the impact on trade was “not comparable with what we saw during the Corona pandemic...it’s just a single spot where you can’t sail”.
The increased shipping costs are often negligible for customers using containers to ship their products into Europe, according to Horn. “If you have 30,000 T-shirts in a 40-foot container, and you pay $200 dollars more, it’s a few cents,” Horn said. “The good thing about container shipping is the impact of transport costs are minimal to the product.”