Global Trade Disrupted as US and Israel Strikes on Iran Escalate Conflict

Global supply chains are facing significant disruption following joint military strikes by the US and Israel on Iran over the weekend, triggering widespread concern across critical trade corridors. The impact extends beyond oil tankers navigating the Strait of Hormuz, affecting container ships carrying consumer goods, auto parts, electronics, and food, as well as fracturing air cargo networks due to airspace closures.

Shipping Industry Response

Whereas ocean container services in the Persian Gulf initially remained unaffected by the military build-up, the escalation of conflict through direct strikes has prompted ships to avoid the area. MSC, the world’s largest container shipping line by capacity, has suspended all bookings for cargo to the Middle East until further notice .

Danish shipping giant Maersk has paused sailings through the Red Sea and Suez Canal, fearing the conflict could spread to key shipping lanes, and is rerouting vessels around the Cape of Solid Hope in South Africa . French shipping giant CMA CGM has announced an “Emergency Conflict Surcharge” effective immediately, adding between $2,000 and $4,000 per container for shipments to and from Gulf and Red Sea countries . The company has also ordered vessels in or bound for the Gulf to seek shelter and suspended Suez Canal transits, rerouting ships via the Cape of Good Hope.

German shipping giant Hapag-Lloyd has introduced a $1,500 per standard container war risk surcharge and suspended transits through the Strait of Hormuz. Rerouting around Africa absorbs roughly 2.5 million 20-foot container units’ worth of global container capacity .

Air Cargo Impact

Air freight is also under considerable strain. Several Middle Eastern airspaces have been closed or restricted, disrupting both passenger and cargo flights. FedEx has suspended flights to and from Bahrain, Israel, Qatar, Saudi Arabia, Kuwait, and the UAE, and halted pickup and delivery services in several Gulf countries. Qatar Airways Cargo has temporarily suspended operations due to the closure of Qatari airspace .

DSV, a Danish logistics company, reports that airspace restrictions are forcing carriers to suspend services or divert flights, lengthening routings. With reduced cargo space on key Asia-Europe and Middle East routes, air freight rates are expected to rise, and airlines may implement short-notice schedule and pricing changes. Ryan Petersen, CEO of Flexport, stated on X that the conflict has removed 18% of global air freight capacity from the market .

Broader Implications for Global Trade

If carriers start omitting Gulf port calls, containers may be discharged at alternative hubs and transported onward by truck. The primary concern, however, is the potential for further disruption to global trade flows through the Red Sea. The current conflict follows more than two years of disruption caused by Iran-backed Houthi attacks on commercial shipping. The escalation of the situation is expected to further weaponize trade and diminish hopes for a substantial return of container shipping to the Red Sea in 2026 .

Recent Developments

The United Nations Security Council held an emergency meeting on Saturday, where the US and Israel clashed with Iran. UN Secretary-General Antonio Guterres condemned the attacks, and many countries urged a halt to the strikes and a return to negotiations . Reports indicate that U.S. And Israeli airstrikes reportedly killed Iran’s Supreme Leader Ayatollah Ali Khamenei . Iran has responded by launching ballistic missiles and drones at US assets and allies across the region, targeting Israel, Bahrain, Kuwait, Qatar, the United Arab Emirates and Jordan .