Chinese cargo ship "Iron Lady" successfully passes through the Strait of Hormuz!

Recently, due to ongoing conflicts in the Middle East involving the U.S., Israel, and Iran, Iran announced a ban on American, Israeli, and European ships passing through the Strait of Hormuz, causing a large number of oil tankers, cargo ships, and other vessels to remain stranded in the Persian Gulf.

According to Liberation Daily, on March 5 Beijing time, a bulk carrier with the signal “China Owner” named the Iron Maiden successfully passed through the Strait of Hormuz along the Oman coast. Information shows that the operator of the Iron Maiden is Cetus Maritime, also known as Shanghai Xinda Shipping Co., Ltd. CEO Yang Xintian stated that they are not responding to questions about the Iron Maiden at this time and will disclose specific details to the media and the public later.

Two major European shipping giants decide to suspend key Middle East routes

According to CCTV Finance, citing The Wall Street Journal on the 6th, Danish shipping company Maersk and German shipping company Hapag-Lloyd announced that, due to escalating regional conflicts threatening safe navigation, they will suspend several major Middle East routes.

On the 6th, Maersk stated that based on the latest risk assessments and operational reviews, considering the escalation of conflicts in the Gulf region affecting navigation safety, they will suspend routes connecting the Middle East with Europe and the Far East, as well as shuttle services within the Gulf. On the same day, Hapag-Lloyd also announced the suspension of multiple Middle East routes, including Oman Gulf shuttle services and routes connecting Asia with the Persian Gulf, India, the Middle East, and the Mediterranean. Hapag-Lloyd also said they will introduce new services to ensure operational stability, but specific details have not been disclosed.

Shipping experts believe that this widespread suspension directly impacts the flow of goods between Asia, Europe, and the Middle East, increasing the risk of disruption to Middle Eastern trade corridors.

Niels Rasmussen, Chief Shipping Analyst at the Baltic and International Maritime Council: In the short to medium term, we expect container port congestion to worsen. Container ships heading to the Persian Gulf may have to unload at other nearby ports, leading to longer docking times, increased port vessel density, and greater congestion.

Experts also point out that several container shipping companies have fully suspended services in the Strait of Hormuz and surrounding areas. This not only directly affects company revenues but also propagates through higher freight rates and supply chain delays, impacting downstream manufacturing and consumer goods industries, thereby increasing inflationary pressures.

John Stoppert, Chief Maritime Director at the International Shipping Federation: The 5th is the expiration date for many insurance policies, which are now likely being renegotiated at higher rates. We are currently in an environment of rising insurance costs across the board, not only in the Persian Gulf and Oman Gulf but also extending south into the Indian Ocean. This could cause a chain reaction in shipping and indirectly push up consumer goods prices.

US announces $20 billion reinsurance plan to secure ships passing through the Strait of Hormuz

Due to escalating conflicts in the Middle East, insurance costs for ships passing through the Strait of Hormuz and surrounding waters have risen sharply. On the 6th local time, the U.S. government announced a reinsurance plan to cover maritime risks for ships such as oil tankers.

On the 6th local time, the U.S. government announced a maritime reinsurance program for Gulf shipping, with the U.S. International Development Finance Corporation providing up to $20 billion in coverage for losses, focusing on risks including war insurance. This move aims to ensure the continued transportation of key supplies such as oil, gasoline, and liquefied natural gas through the Strait of Hormuz to global markets.

Reinsurance is insurance for insurance companies. Amid tense Middle Eastern tensions, war risk insurance premiums in the Gulf region have skyrocketed. For example, the war insurance rate for a tanker valued between $200 million and $300 million has increased from about 0.25% (roughly $625,000) before the conflict to 3% (about $7.5 million), a more than tenfold increase. Many commercial insurers have canceled war risk coverage for ships in the Persian Gulf and nearby waters. The surge in premiums raises transportation costs, and without insurance, the risks of shipping increase, causing many ships to remain near the Strait of Hormuz.

JPMorgan estimates that the insurance needed for tankers in the region could exceed $300 billion, far beyond the $20 billion announced by the U.S. Additionally, some analysts believe that insurance is not the main issue facing shipowners. The primary reason tankers avoid passing through the Strait of Hormuz is concerns over their own safety.

Source: Daily Economic News

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