As Iran war hits trade hubs, China’s logistics firms scramble for alternatives

Logistics companies in China are feeling the strain from the US-Israeli war on Iran, as volatile crude prices and disrupted transport routes ripple through global supply chains. With e-commerce cargo stranded in the Middle East and freight rates skyrocketing, industry insiders said they expect the fallout to last months, even as US President Donald Trump signalled the war could end soon. While some saw opportunities in alternative Central Asian corridors, Chinese businesses reliant on the region as a critical trade artery remained exposed. At a Greater Bay Area airline logistics forum in Guangzhou on Tuesday, one exhibitor said his company had only recently moved its transshipment hub to Doha, where cargo is diverted to Madrid. The strategy aimed to bypass tensions in the Red Sea, where Yemen’s Houthi rebels had attacked commercial and military ships in what the group’s leadership described as an effort to end Israel’s war in Gaza. But the firm’s decision had unexpectedly backfired, landing it in even deeper trouble. “We chose this route at higher costs to avoid the Red Sea tensions, but the current situation looks very bleak,” he said. “We currently have about 100,000 tonnes of cargo stranded at the airport, mainly e-commerce parcels, and both the sellers in China and clients in Europe are extremely worried.” “The only small consolation is that the conflict broke out during the off-season,” he added. “We’ve just passed the Chinese New Year and the Middle East is observing Ramadan, so for now the losses remain within the range our insurers can cover.” At the forum’s main venue, a manager at Guangzhou Jialianxun Logistics warned disruptions to the industry could last for up to six months. “It’s foreseeable that freight rates will hit record highs this year,” said Yu Mingxin, the company’s route general manager. “The global aircraft fleet is ageing. Airlines are retiring about 70 to 80 aircraft each year, but only receive deliveries of about 50 to 60, so capacity was already shrinking.” The turmoil in the Middle East would only deepen transport capacity shortages in the logistics sector, Yu added. As global energy markets and transport routes absorbed the shock, manufacturers in Guangdong – a major small-parcel export hub – also faced headwinds. In extreme scenarios, our logistics costs could rise by more than 30 per cent Ken Chung, Chamber of Hong Kong Logistics Industry Yang Xuehai, founder of Guangzhou Quantitative Consulting, said cargo transshipments through the Middle East had been dealt a major blow. Regional airlines often operate large aircraft such as the Airbus A380 and Boeing 747, making Middle Eastern hubs a preferred transit point for many Chinese sellers shipping goods overseas, he said. “Freight rates to the Middle East were about US$3 per kilogram before the conflict, but tight capacity briefly drove prices up two to threefold, though they have recently eased.” Within 24 hours of the Strait of Hormuz crisis, capacity on major routes carrying Asian goods to Europe via the Middle East fell by as much as 26 to 40 per cent, he added, though some flights recently resumed operations. “Aviation, shipping and road transport all consume large amounts of crude oil”, Yang said, noting that prices for materials such as synthetic fibres, chemicals, plastics and rubber were also showing signs of rising. Ken Chung, chairman of the Chamber of Hong Kong Logistics Industry, said the rise in global oil prices had already pushed up costs on road routes from mainland China to Hong Kong by 15 to 25 per cent. Ocean freight departing Hong Kong for overseas destinations was also facing a US$1,500 surcharge per load when passing near the Strait of Hormuz, he added. “In extreme scenarios, our logistics costs could rise by more than 30 per cent,” Chung said. “We may even have to divert shipments via the Cape of Good Hope in Africa.” The upheaval has sparked interest in alternative trade corridors. As companies sought new ways to reach Europe, a customs brokerage manager specialising in Central Asia and Russia said inquiries about those routes had surged about fivefold over the past week. Routes from China’s western border through Central Asian countries such as Turkmenistan, or via Azerbaijan in the Caucasus and then through Turkey to Europe, were rapidly gaining popularity, he added. The manager described meeting with a frustrated client from Shenzhen on Sunday. “After an Amazon data centre in the United Arab Emirates was hit, his back-end system crashed, and he lost a large number of orders,” he said. “He rushed over to consult us and other firms about reorganising both his platform and logistics arrangements.” “The war has made more sellers realise the importance of diversifying routes rather than relying on a single faster channel.”

As Iran war hits trade hubs, China’s logistics firms scramble for alternatives

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Disrupted Middle East transit routes squeeze sector, pushing freight costs higher and pressuring supply chains

Disrupted Middle East transit routes squeeze sector, pushing freight costs higher and pressuring supply chains