Danish shipowners flag concern over Middle East crisis
Chief executives of major Danish shipping companies have expressed concerns over inflated costs of shipping due to the ongoing geopolitical turmoil in the Middle East.
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The US-Israel conflict with Iran that began earlier this year has caused substantial disruption to the global maritime industry, as well as energy flows through major shipping conduits like the Strait of Hormuz in the Persian Gulf.
The escalation into a full-scale conflict has prompted shipping companies to expect market conditions to worsen over the course of the year, according to market analysts.
In a survey conducted by Danish Shipping, majority member companies assessed that overall market conditions in the shipping industry will deteriorate over the next 12 months.
“Market conditions in the shipping industry are more challenging today than they were 12 months ago. The outlook ahead is also worrying,” Danish Shipping said.
Geopolitical instability in the region has significantly raised operating costs for shipowners, the survey showed. Such cost increases typically occur when supply chains and transport routes are disrupted, tariffs and duties shift, and key chokepoints – like the Strait of Hormuz – are constrained within a short period.
Four out of five respondents said operating costs have risen. Meanwhile, about half of the 23 respondents of the survey believe the cost increase has been “to a lesser extent”, while one third report it has been “to a great extent”.
“The higher costs naturally have financial implications for shipping companies, but also for consumers, who may end up paying more for their goods,” remarked Anne H. Steffensen, chief executive of Danish Shipping.
A knock-on effect of the Middle East conflict can be seen in escalating freight rates for tanker companies, Danish Shipping noted.
“The current geopolitical tensions are so numerous and span so many fronts that they are harder than usual to navigate,” Steffensen added.
By Aparupa Mazumder
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