The freight rates of Middle Eastern routes have surged significantly, and the geopolitical risks in the Strait of Hormuz have disrupted the shipping market

        Affected by the geopolitical situation in the Middle East, the risk of navigation in the Strait of Hormuz has increased, and ship attacks have occurred frequently. Several international P&I associations have tightened the underwriting conditions for war risks in the Gulf region. Many shipping companies, for the safety of their ships and crew, have actively avoided direct navigation routes through the strait, reduced the effective capacity of direct routes to the Persian Gulf in the Middle East, and suspended some direct routes, switching to transit detours. Ship circumnavigation will lengthen the sailing distance, and the single voyage time generally increases by 10-14 days. The number of voyages that can be executed by the same ship in a year decreases, further causing a contraction in the actual available market capacity. Combined with the increase in international fuel costs, the imposition of war risk surcharges by shipping companies, and emergency conflict surcharges, as well as the congestion of terminal operations and the saturation of inland land bridge transportation resources at core destination ports in the Middle East, the detention period of containers at destination ports has been prolonged, making it difficult for empty containers to complete return turnover. The supply of empty containers at domestic ports of origin is also tight, and multiple factors have jointly driven a significant increase in freight rates on Middle Eastern routes. Taking the 40 foot container from Shanghai to Dammam Port as an example, the spot freight rate in the market has risen from $6600 to over $10000, an increase of more than 50%; The spot market presents a situation where it is difficult to find a single ticket for shipping space. Even if the booking is completed, frequent cancellations and postponements of shipping schedules are caused by ship companies skipping ports, canceling voyage schedules, and adjusting port schedules. There is significant uncertainty in transportation efficiency, and the validity period of freight quotes is greatly shortened. Short term quotes cannot be used as a long-term basis for performance.

        The pressure of cost transmission is spreading to the downstream foreign trade end, and many low value categories, such as daily necessities and ordinary light industrial products, are facing the dilemma of freight rates being higher than their value. Overseas buyers' willingness to place orders has weakened, and the pressure on domestic small and medium-sized foreign trade enterprises to accept orders and fulfill contracts has significantly increased. Some companies have started to turn to multimodal transport solutions to hedge the uncertainty of maritime transportation channels. They use peripheral ports for maritime transit and land bridge transportation, or adjust the shipping rhythm and split orders to diversify risks. However, the transit mode also brings about the problems of increased transportation costs and longer delivery cycles. At present, market institutions continue to track changes in the situation in the Taiwan Strait. If geopolitical conflicts escalate further, the premium of war insurance and the cost of detours will continue to rise, and the stability of freight rates and cabin space on Middle Eastern routes will face greater pressure; If the situation eases, the risk premium will quickly fall back, but it still takes a certain period of time to digest the backlog of goods at the port.