Higher fuel costs seen as the key impact of the Iran war on container shipping

As per an analysis by Linerlytica, the only tangible impact of the Iran war on container shipping has been higher fuel costs. The widely expected capacity depletion has not materialised in the container markets: (1) port congestion across major Far East gateways eased just weeks into the conflict; (2) CMA CGM reinstated a second Far East-Mediterranean service via the Red Sea last week, despite the heightened threat from Houthi attacks; (3) the Iranian government has allowed vessels previously trapped inside the Strait of Hormuz to sail; and (4) the downside for markets outside the Persian Gulf is that roughly a quarter of the capacity previously serving the Gulf is now being redeployed to other routes.

It adds:

“Don’t be misled by the 50% rally in freight futures contracts. Sentiment in freight futures market is bearish as open interest collapsed, indicating that most traders have exited the market over the past month.”

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