Shipping Rates 4x Higher Amid War Risk

The global shipping market is currently undergoing significant turmoil due to the escalating situation in the Middle East. Key shipping routes that were once stable are now being rerouted, leading to a fourfold increase in shipping rates and skyrocketing costs. Some cargo is even being abandoned mid-transit, causing dissatisfaction among shippers who accuse the industry of “coercive extortion.” Industry experts describe the current market as resembling a “Wild West” scenario.

Shipping Companies Invoke Special Clauses

Leading shipping companies such as Mediterranean Shipping Company, Maersk, CMA CGM, and Hapag-Lloyd have begun notifying customers that they reserve the right to adjust shipping routes under traditional maritime clauses in special circumstances. This means:

• Shipping companies can unload cargo at the “nearest feasible port” instead of the original destination.
• Any subsequent costs for transshipment, storage, and customs duties are to be borne by the cargo owner.

In practice, some cargo originally destined for the Middle East is being held at ports in India or the UAE, disrupting the supply chain.

Freight Rates Skyrocket

As risk costs and operational pressures continue to rise, freight rates have surged dramatically. For example, the rate from the UK to Dubai's Jebel Ali Port has increased from approximately $1,500 per FEU to nearly $6,000 per FEU, a nearly fourfold increase. Additional costs include:

• War risk surcharges
• Fuel surcharges
• Land transportation and port handling fees

These combined costs often add thousands of dollars to the total expenditure per container.

Shippers' Complaints

This situation has quickly led to dissatisfaction among shippers. John Mason International, a multinational logistics company, reports that its clients face additional storage fees and potential new import duties when their cargo is unloaded mid-transit. If they refuse to pay these fees, shipping companies may freeze accounts or suspend services. Companies argue that this practice is akin to “coercive extortion.” Meanwhile, Turkish appliance giant Beko criticizes the current shipping market for its oligopolistic nature, where shipping companies wield significant pricing and rule-setting power.

Impact on Cold Chain and Fresh Produce Industries

Freshfel Europe, an industry organization, highlights the severe impact on fresh produce exports. Refrigerated containers are unable to reach the Persian Gulf by sea and are forced to switch to land transport, increasing customs clearance difficulties and requiring repeated documentation, which raises both time and cost. For the fresh produce industry, which already operates on thin margins, this impact is particularly devastating.

Rising Costs Across the Board

In addition to freight rates, several cost components are rising simultaneously:

• Fuel costs: Rising oil prices increase marine fuel expenses.
• Surcharges: Ocean routes incur additional charges of approximately $160–$400 per container.
• Charter rates: Due to rerouting and capacity constraints, charter rates have reached pandemic-era highs.

Market analysts believe that route diversions, equipment shortages, and safety risks are creating a new “cost transmission chain.”

Final Thoughts

The operational logic of the shipping market is undergoing a significant shift, moving from efficiency and cost-driven strategies to risk control as the central focus. With increasing uncertainty, the rules are clearly tilting in favor of shipping companies, prioritizing safety and risk over punctuality and price competition. To mitigate potential risks, shipping companies are continuously adjusting routes, tightening fulfillment responsibilities, and adding various surcharges, which exacerbates cost pressures and operational uncertainties for cargo owners.

From skyrocketing freight rates to mid-transit cargo abandonment and the layering of fees, the global shipping market is experiencing a deep imbalance. Until the Middle East situation stabilizes, this “disorderly operation” is likely to persist, with cargo owners and end consumers ultimately bearing the costs and risks.