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The war in Iran and the closure of the Strait of Hormuz has wrought significant harm on the global economy, but for the shipping industry, it is only the latest disruption in a series of damaging episodes.

The Covid pandemic triggered a collapse in maritime trade. Then, in 2021, the Ever Given ship blocked up the Suez Canal for five catastrophic days and, in 2023, Houthi rebels in the Red Sea began attacking ships in the Bab al-Mandab strait. From 2023 into 2024, Panama experienced one of its worst droughts in recorded history, limiting the number and weight of ships which could pass through its vital canal – a situation likely to become more frequent with climate change.

The closure of Hormuz, which normally accommodates roughly a quarter of the world’s seaborne oil trade, has therefore added pain to a system already dealing with multiple headaches. But experts warn the impacts on supply chains could become far worse if the conflict drags on over several months, while concerns grow that it could set a precedent for other maritime chokepoints to be weaponised.

In a recent analysis, maritime research consultancy Drewry found that while a short war would be “manageable” for the container shipping industry, a longer conflict of up to a year would “impose a severe shock that will reverberate for years to come”.

A crucial issue is the supply of bunker fuel used by vessels. Since the start of the war, bunker prices have risen by between 60 and 80 per cent.

Drewry’s senior manager for container research, Simon Heaney, tells The House: “The risk from a fuel perspective goes from being a cost risk, which it currently is, to becoming more of a supply risk.

“At the moment, significant inventories have created a buffer, but as those stocks deplete, there could be an issue in terms of just physically getting these ships to do their job.

“I think we’re a long way off from that, but if it carries on for that duration [of up to a year], you’ll see some panic. It will have an impact in terms of how fast ships go – they will slow down to preserve consumption…

“It will start to move from what is currently a fairly limited network issue – a regional problem, and a slight hike in costs – to something much bigger, and it will have wider effects.”

An analysis by S&P Global Market Intelligence meanwhile warns that fuel shortages will have “implications for agriculture, mining and industry as well as transport”, with parts of Africa and south Asia thought to be most exposed.

Sourcing alternative fuels to gasoline and diesel “may be limited”, it adds, as countries start restricting “exports of their own production to protect domestic markets, as has already been the case with mainland China and South Korea”. The Malaysian government has similarly said it will prioritise its domestic supply.

The analysis also highlights the Middle East’s importance in supplying raw materials, gases, plastics and fertilisers to industries around the world, with the potential to “bring down entire supply networks”.

For instance, it points out that while Taiwan’s imports from the region are equivalent to only 2.39 per cent of its GDP, a loss of helium supplies could cripple its electronics output equivalent to 25.2 per cent of its national output.

Nor would the UK be immune to some of these impacts.

“We’ve got exposure to diesel, sulphur, unwrought aluminium,” says Chris Rogers, S&P’s head of supply chain research. “About a third of our imports of unwrought aluminium come from the region, so there is that economic effect even for the UK, directly.”

He points out that the peak shipping season, which typically starts in July, is still to come, meaning that capacity will soon become more stretched. In addition, due to the length of voyages undertaken on different trade routes, there is a substantial time-lag for the impact of disruptions like Hormuz to be felt.

“If we look, for example, at shipping from the Middle East to the United States, in April, the volumes only fell by 25 per cent year-on-year because the last boats hadn’t yet arrived,” says Rogers.

“The UK is still seeing some of that as well, because it’s a similar kind of journey time. It’s only really over the next few weeks that the boats that should have arrived, won’t have arrived… To a certain extent, we could have peace today and there would still be an impact.”

To substitute some of the lost trade to and from the Gulf, the shipping industry has been forced to rapidly utilise several overland alternatives across and around the Arabian peninsula.

MSC, the world’s largest container shipping line, is using the Red Sea ports at King Abdullah and Jeddah, while CMA CGM, the third-largest carrier, has utilised the Turkish port of Mersin.

“They’re using a variety of avenues – it’s not all being concentrated into a couple of substitute ports,” says Heaney. “There are different ways in, but even with these multi-modal solutions, the amount of goods in and out of the Gulf is going to be drastically lower.”

Bolstering these links and building new ones, he warns, will be “urgent”, as countries on the Gulf were “very ill-prepared” for such disruption to their trade flows.

Could other nations follow Iran’s example by using chokepoints as leverage? At an April symposium in Jakarta, Indonesian finance minister Purbaya Yudhi Sadewa floated the possibility of imposing a toll on ships through the Strait of Malacca – before quickly playing the idea down.

There could be an issue in terms of just physically getting these ships to do their job

“Whether that was a serious suggestion, I doubt,” says Heaney, “but it’s sort of a warning sign: don’t mess with us, because we could do something similar. In the absence of a nuclear deterrent, it’s an economic deterrent they could at least flag, without necessarily needing to deploy.”

Rogers points out that closing either Malacca or Panama would severely hit the economies of the countries in control of those chokepoints. A more realistic threat could come from China.

“The bigger question isn’t ‘Would Singapore or Malaysia feel emboldened to close the Strait of Malacca?,’” says Rogers. The question, he suggests, is: “Does China feel more emboldened to say ‘American sea power ain’t all that, so actually we could blockade Taiwan, and the American navy’s not going to be able to unblockade [it], they’re not going to be able to guarantee shipping’.”

For the shipping industry, the closure of Hormuz has further underscored the need for global trade networks to become more flexible and resilient.

“A lot of talk has gone into resilience and how you make supply chains more robust and able to withstand these shocks that are coming at a far greater speed than ever before,” says Heaney. “You can never eliminate it, but I think we are going to see a recognition that we need to diversify and not put all our eggs in one corridor.

“Even if the Red Sea opens and Suez transits are safe all of a sudden and Hormuz is safe, there needs to be investment and diversification in terms of the routing, just so there is a bit more redundancy in te whole system.”

If cargo distributors can devise “chokepoint-immune supply networks”, says Rogers, with Europe sourcing goods from Turkey and North Africa, and countries in the Americas sourcing more from one another, that could also reduce the scope for severe disruption.

But Jim Hall, an Oxford professor who recently co-authored a research paper on maritime chokepoints, is sceptical about whether this response, known as ‘near-shoring’, would provide much of a solution.

“We know that globalisation is only partially going into reverse, and much as Trump or whoever it may be would wish it away, actually, it brings us a great deal of benefit,” he says.

“I don’t think near-shoring, on-shoring, is going to much reduce our exposure to chokepoint-related disruptions to global trade. Decarbonisation of our economies would do more in that sense.”

The changing climate will also prompt interest from shipping firms in whether more use can be made of the Arctic Sea. The route from north-west Europe to east Asia via Russia’s northern coast is roughly 40 per cent shorter than taking the Suez Canal, but the route is only free of ice during the warmer months of the year and specific vessel types are needed even then.

“They’re smaller [vessels], so you don’t get the economies of scale,” says Heaney. “Even though the climate is making the season that you could use the Arctic a bit longer, it’s debatable how long that is and it’s not necessarily reliable.”

While some Chinese firms have been carrying out test runs along the route, the economics still don’t stack up for large western carriers, he argues – and nor does travelling through Russian waters do any favours for their brand image: “The PR, the optics, from a major carrier perspective are terrible, so none of them really want to touch it with a bargepole.”

Maritime chokepoints show no sign of becoming less critical to the world’s economy, as ships continue to carry about 80 per cent of traded volumes and 50 per cent of traded value worldwide.

Hall’s research, published late last year, found that disruptions at chokepoints affect around $192bn worth of maritime trade each year, which in turn result in estimated economic losses of about $14bn annually, through delays, rerouting, insurance premiums and higher freight costs.

Environmental threats, like tropical cyclones in the Taiwan Strait and droughts in the Panama Canal, account for some of the risk. But Hormuz has demonstrated just how much disruption can be caused when states decide to flout the internationally agreed principle of freedom of navigation.

“It is dawning on smaller nations, who geographically happen to have this leverage,” warns Heaney, “that all of a sudden, here is something you’ve got, that you could potentially use to your advantage.”