Political uncertainty has become the biggest risk hanging over the shipping industry, with ships and cargo worth about $125 billion still stuck in the Persian Gulf, waiting to pass through the Strait of Hormuz to resume operations, according to Allianz Commercial.
In its latest industry update, published on Wednesday, the insurer said the closure and reporting of the strait mine was just the latest in a series of global shipping disruptions. For owner-managed firms and exporters watching commodity costs rise, it’s another reminder of how quickly long-term friction can hit the balance sheet at home.
The developments point to what Allianz calls a “new maritime order”: growing security risks in strategic shipping lanes around the world, established trade routes thrown into turmoil, continued uncertainty, higher risk premiums and a renewed emphasis on cost-effectiveness.
Allianz data shows that about 1,150 cargo ships and about 20,000 seafarers are stuck in the Gulf. Behind the headline sits a person: the crew who have spent months on board, facing the constant threat of attack and the mental stress that comes with it.
Thomas Lillelund, chief executive of Allianz Commercial, said the industry had moved from decades of relative calm, with stable trade and predictable operating conditions, to a more complex and dynamic environment.
“The conflict in the Middle East and the closure of the Strait of Hormuz are the latest in a series of severe disruptions affecting ship owners and cargo operators,” he said. “Strength, geopolitics and efficiency must be balanced in a world of unpredictable growth, where the costs of uncertainty are reshaping the transport industry.”
The strait is important beyond the insurance market. The US Energy Information Administration describes it as the world’s most important oil transportation hub, carrying about one-fifth of the world’s liquid petroleum use, with very few routes closed. That helps explain why disruptions there have already pushed oil prices to near $120 a barrel and why the International Energy Agency has warned of a 1.8 million barrel per day shortage this year.
Allianz was at pains to insist that marine insurance had been available throughout the conflict, albeit at high premiums and costs. The main problem for ship owners, he said, was less about insurance and more about the basic risks of ships and crews when traveling through an active conflict zone.
Even if the US-Iran peace deal holds and the strait reopens, the insurer warned, owners will want strong guarantees of safe passage, especially if traffic is to return to pre-war levels of up to 140 ships a day.
“The closure of the Strait of Hormuz sets a dangerous precedent and raises questions about the long-term future of this and other sensitive areas,” said Captain Rahul Khanna, global head of maritime risk consulting at Allianz Commercial.
“What is becoming clear is that we have to pay the price of uncertainty, moving from ‘just in time’ to ‘just in case’ supply chains, and prioritizing resilience over cost efficiency.”
For UK firms, this course is standard. The epidemic, the Suez blockade and the Red Sea invasion each revealed how to expose the dependence, timely, and the Gulf crisis now added new insurance and cargo costs to the scarce assets. Resilience, if considered an optional extra, quickly becomes a competitive necessity, which is one reason why a growing number of small exporters are rethinking their marketing routes and diversifying their sales channels to spread risk.
The full picture is laid out in Allianz Commercial’s Safety and Shipping Review, which notes that, even as long-term safety records improve, the structural risks facing global trade are increasing. In an industry that has long been competitive on cost, the price of assurance is suddenly a very important value.
