War risks soar, insurance companies evacuate

Late at night on March 2, local time, the advisor to the commander of Iran’s Islamic Revolutionary Guard Corps announced to the outside world that the Strait of Hormuz had been closed and Iran would attack all ships trying to pass through the strait. Iranian Revolutionary Guards General Jabari made it clear in a televised speech: "We will set fire to any ship that attempts to pass through the Strait of Hormuz."

This statement was a tough response to the US and Israel launching a military strike against Iran on February 28. The Strait of Hormuz connects the Persian Gulf and the Gulf of Oman and is the only way for crude oil exports from Middle East oil-producing countries such as Saudi Arabia, Iraq, Qatar, and the United Arab Emirates. The oil transported through this strait accounts for about one-fifth of the total global oil transportation. Now that this global energy "main artery" has been cut off and thousands of ships are trapped in the Persian Gulf, the global shipping industry is facing the most severe shock wave in recent years.

Clarkson Research estimates that approximately 3,200 ships are currently trapped in the Persian Gulf, accounting for 4% of the global fleet capacity. Specifically, they include: 112 crude oil tankers (of which more than 70 are VLCC, accounting for 8% of the global VLCC fleet capacity), 195 product tankers (4%), 241 bulk carriers (1%), 114 container ships (1%) and 21 VLGCs (5%). There are also about 500 ships "waiting" outside the Gulf, mainly anchored in ports along the coast of the United Arab Emirates and Oman.

About 460 container ships (accounting for 7% and 10% of the global container fleet in terms of ships and TEU respectively, with a total transport capacity of approximately 3.2 million TEU) were originally planned to call at Persian Gulf ports. Now, the established routes of these ships are seriously blocked. As of March 3,The main container ships trapped in the Persian Gulf are distributed as follows: 38 Mediterranean Shipping (128,000 TEU), 32 CMA CGM (105,000 TEU), 28 Maersk (92,000 TEU), 22 COSCO Shipping (75,000 TEU), 18 Hapag-Lloyd (62,000 TEU), and 12 Ocean Network (48,000 TEU).

In the face of rapidly rising geopolitical risks, the world's major liner companies quickly activated emergency hedging mechanisms. Suspending bookings, detouring around the Cape of Good Hope, and imposing additional surcharges became standard operations.

The scope of suspended bookings continues to expand. Mediterranean Shipping Company (MSC) issued an emergency notice to suspend all new cargo bookings to the Middle East globally. Maersk announced that it would immediately suspend the receipt of refrigerated, dangerous/special cargo from the United Arab Emirates, Oman, Iraq, Kuwait, Qatar, and Bahrain, and also suspend all bookings between the Indian subcontinent and multiple Gulf countries. CMA CGM has suspended all booking operations in several Middle Eastern countries, covering major hub ports such as Bahrain, Kuwait, Qatar, Iraq, the United Arab Emirates and Saudi Arabia. Hapag-Lloyd has also suspended bookings of refrigerated containers to and from the Arabian Gulf and Persian Gulf. Ocean Network Shipping (ONE) announced that it will suspend accepting new bookings to and from the Persian Gulf region from now on. Wan Hai Shipping and Yang Ming Shipping have also followed up and suspended related bookings.

In terms of route adjustments, Maersk confirmed that its ME11 and MECL routes will bypass the Cape of Good Hope and will no longer pass through the Red Sea waters. CMA CGM has suspended all Suez Canal sailings and related ships have been diverted via the Cape of Good Hope. Hapag-Lloyd announced the suspension of all ship traffic through the Strait of Hormuz until further notice. COSCO Shipping Lines stated that ships that have entered the Persian Gulf will stay in safe waters or anchor after completing their original port operations.

Emergency surcharges are fully activated. CMA CGM announced that it will impose an "Emergency Conflict Surcharge" (ECS) starting from March 2. The standards are: US,000 for 20-foot containers, US,000 for 40-foot containers, and US,000 for reefers and special equipment. Hapag-Lloyd adds a "war risk surcharge" (WRS), which is US,500 per TEU for standard containers and US,500 per TEU for refrigerated and special containers. Some freight forwarders reported to the media that there is currently a periodic vacuum in the supply of space. If high-value goods need to be shipped urgently, the freight per container may even exceed US,000.

Simultaneously with the shipping market, the insurance and reinsurance markets are shrinking rapidly. Huatai Securities research report pointed out,All 12 members of the International Insurance Association (IG) have issued war risk cancellation notices in the Persian Gulf region. The notice will take effect at 00:00 GMT on March 2 (8:00 on March 2, Beijing time). The existing war risk protection will expire 72 hours later (that is, March 5).

This means that after 72 hours,Ships in the area will enter a "streaking" state.Policyholders need to renegotiate premiums with insurance companies, and premiums are expected to rise significantly. According to the Financial Times, the premium for ship war insurance for a single voyage to the Persian Gulf before the conflict was around 0.25% of the hull value, and the market expects that premiums may rise by 50% in the short term. For a tanker worth US0 million, the insurance premium for a single voyage may reach US5,000 or even US0,000.

The Joint Maritime Information Center (JMIC) has raised the regional threat level to "CRITICAL". In the past 24 hours, many commercial ships have been attacked by missiles or drones. AIS data shows that the average daily traffic in the Strait of Hormuz has plummeted. JMIC pointed out that even without formal legal closures, the availability of insurance itself has become a "key gate factor" in whether a ship transits the border.

Freight forwarding companies on the front line are bearing the direct impact of this storm. Staff at Huakai International Freight Forwarding in Huzhou, Zhejiang, told the media that several large containers they shipped a year ago were floating on the sea. The original freight per box was only more than 3,000 US dollars. Now, not only is it delayed, but there is also a war surcharge of 2,000 to 3,000 US dollars.

The cargo of Ningbo Jiawei International Logistics Co., Ltd. arrived at Bandar Abbas Port in Iran as early as February 22 on board the freighter "MAHAN". The ship was loaded with air fryers, portable juicers and other small household appliances from Cixi, Zhejiang, worth US8,000. In the early morning of March 1, they received an emergency notification that the Bandar Abbas container terminal was hit by air raid debris and caught fire. In the end, the overseas customers, domestic factories and freight forwarding companies agreed to share the additional freight equally and planned to transfer the goods to Khorramshahr Port in Iran.

The person in charge of the Middle East route of Zhejiang Ganglianjie Logistics Technology Co., Ltd. calculated an account: the current sea freight on the Middle East route has increased by 30% to 50%, war insurance premiums have soared by 300% to 400%, and the single container freight has jumped by about US,000. Wu Shengjun, chairman of Yiwu Yueda International Freight Forwarding Co., Ltd., said that some shipping companies have extended the free period to 15 to 20 days, but the attitude of most companies is still unclear.

Faced with the "dilemma" situation, Ouyang Nengwei, general manager of Ningbo Jiawei International Logistics, said frankly: "It is now clear that 90% of the goods are returned, and the cost can only be borne by the factory itself."

Zheng Jingwen, deputy director of the International Shipping Research Institute of the Shanghai International Shipping Research Center, suggested that at this stage, freight forwarders and foreign trade companies should maintain communication with overseas customers and postpone the shipment of goods from high-risk areas in the Middle East until the situation becomes clearer. If the relevant goods are already in transit, maintain close communication with the consignee and the liner company, keep abreast of the ship's navigation direction, cooperate with the alternative shipping arrangements, and negotiate with the consignee on the sharing of transportation costs and the method of receiving the goods.

For Chinese companies that rely on the Middle East for re-export trade, re-evaluating the timeliness of logistics links has become a top priority. Many industry insiders said that under the current situation,"Hedging is better than profit"Become a consensus among freight forwarders and customers.

When stability is restored in the Strait of Hormuz, it will directly affect the next stage of evolution of global energy transportation channels, tanker freight rates and the supply and demand structure of container shipping. In the short term, risk premium and capacity mismatch will become the main theme of the shipping market.