The State of Global Shipping

imdzanews — Thu, 14 May 2026 13:31:56 +0000

Good day!

Global shipping lanes are currently under significant strain, with the effects being felt across every sector reliant on international trade. At IMD, we believe it is important to communicate openly about the current situation, what it means in practical terms, and the measures necessary to assist you to safeguard your supply chain.

The Middle East Crisis

Since late 2023, Houthi attacks on commercial vessels in the Red Sea have reshaped one of the world’s busiest maritime corridors. The Bab el-Mandeb Strait once carried approximately 12 to 15 per cent of global trade and 30 per cent of all container traffic between Asia and Europe.

By April 2026, this sat at a “moderate threat level” with major carriers still unwilling to commit to regular transits. A ceasefire in Gaza brought some relief towards the end of 2025, but renewed hostilities involving Iran, the United States, and Israel quickly unravelled that progress.

IMD has not been insulated from these conditions. A number of our own shipments were caught up in the Strait of Hormuz during the peak of the disruption, held in the waterway for several weeks before onward transit became possible. We are pleased to confirm that those shipments are now on their way to their destinations. This experience has only reinforced our commitment to proactive communication and forward planning with our customers.

When Iran temporarily restricted access to the Strait of Hormuz between February and April 2026, the consequences were immediate and severe. Roughly 20 per cent of the world’s oil and natural gas passes through that waterway. Brent crude climbed past US$126 per barrel at its March 2026 peak, rising more than 10 to 13 per cent in early trading in a single week. Maersk, CMA CGM, and Hapag-Lloyd all suspended transits through the Strait and the Red Sea, rerouting their fleets south around Africa’s Cape of Good Hope. It was the largest disruption to global energy supply since the 1970s.

What Has Happened to Fuel & Freight Costs?

Key Figures at a Glance

Suez Canal transits: Down from 2,068 per month (Nov 2023) to roughly 877 (Oct 2024), a fall of over 57%
Extra distance via Cape of Good Hope: Approximately 11,000 nautical miles (20,000 km) added per voyage
Added transit time: 10 to 14 days per voyage
Added fuel cost per vessel: Up to US$1,000,000 per voyage
Goods disrupted (Oct 2023 to May 2024): Estimated US$1 trillion worth of cargo (Russell Group)
Asia to Europe freight rates (mid-2026): 25 to 40% above pre-crisis levels
Asia to US East Coast rate premium: 15 to 25% above pre-crisis levels
Brent crude peak (March 2026): US$126 per barrel

Bunker fuel is the single largest operating cost for a container vessel, and its price has been extraordinary. In early March 2026, the average price of Very Low Sulphur Fuel Oil (VLSFO) across the world’s top 20 bunkering hubs hit approximately US$960 per tonne, close to double the pre-conflict average. Between late February and mid-March alone, Singapore fuel prices rose 118 per cent, and Rotterdam prices climbed 62 per cent. These are not gradual increases. They happened in a matter of weeks.

For South Africa, the picture has been particularly sharp. As more and more vessels reroute around the Cape, Durban has become a critical bunkering stop. The increased demand has pushed VLSFO at Durban to approximately US$1,480 per tonne, compared to US$639 in Rotterdam and US$722 in Singapore at the same time. Buyers in South Africa have reportedly paid more than double what they were paying just weeks before the escalation. Supply shortages at the port have compounded the pressure further.

These costs are not limited to the routes directly affected. Shipping lines are implementing Bunker Adjustment Factors (BAFs) and war-risk surcharges across their global networks, while road freight surcharges in major markets have increased by approximately 50% as rising diesel prices continue to impact ground transport costs. Any supply chain connected to international shipping is, in one way or another, experiencing the effects of these disruptions.

What This Means for Industrial Minerals

The reality is that no commodity remains insulated from the current situation. Longer transit routes, tightening vessel capacity, and growing congestion at major trans-shipment hubs such as Singapore and Tanjung Pelepas are collectively contributing to extended lead times and increased landed costs. This has become the operational baseline for businesses reliant on global sea freight.

For products such as Chromite Sand and Micro Talc, where both consistency of supply and technical precision are critical, the margin for disruption is already limited. Fertiliser prices have, in some instances, risen by as much as 32% within a single week following disruptions in the Strait of Hormuz corridor, while chemical supply chains supporting industrial processing operations continue to encounter mounting bottlenecks. The resulting pressure across manufacturing environments escalates rapidly under these conditions.

Adding to this, the disruption to normal trade flows has created a pronounced container imbalance that is being felt acutely in South Africa. There is currently a shortage of 20-foot empty containers available for export, a direct consequence of the rerouting and repositioning of equipment globally. Some carriers have begun to ration container availability as a result, introducing an additional layer of uncertainty for exporters reliant on consistent equipment supply.

War-risk insurance premiums have also increased substantially. For large oil tankers, transit insurance costs have risen from approximately 0.125% to between 0.2% and 0.4% of insured vessel value. On a single voyage, this can equate to an additional cost of roughly USD 250,000. Ultimately, these costs are absorbed further down the supply chain by the end purchaser of the goods being transported.

Looking Ahead

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We want to be honest about the outlook, too. Industry consensus as of mid-2026 is that Cape of Good Hope rerouting will remain the default for most Asia-to-Europe and Asia-to-US East Coast services through at least 2027. The Strait of Hormuz has seen some reopening of commercial traffic, but conditions remain fragile, and carriers are not planning for a return to normal any time soon.

For our customers, this is a good moment to think about forward planning, healthy stock buffers, and the value of suppliers who have already built the logistics relationships to navigate disruption. We are here for those conversations.

Supply chain resilience does not show up when everything is running smoothly. It shows up in moments exactly like this one. We are grateful for the trust you place in us and we will keep working to earn it.

Thank you for being part of the IMD network. As always, please do not hesitate to reach out if you have questions about how any of this affects your specific supply arrangements.

For industry insights and news from the world of industrial minerals, stay connected with IMD. Follow us on LinkedIn and visit our website for more information.