Abu Dhabi container shuttles keep Hormuz trade flowing

• Major carriers avoid Hormuz
• Freight costs have surged
• Crossings a fraction of pre-war levels

Abu Dhabi-backed shipping companies are shuttling container cargo through the Strait of Hormuz as major international carriers avoid the waterway.

The services, carried out by smaller feeder ships, mirror the tanker shuttle model used by oil producers to carry crude to international very large crude carriers (VLCCs) in the Gulf of Oman, according to Lloyd’s List.

The cost of shipping a loaded 40-foot container from China has risen by about 600 percent, from about $850 before the US-Iran conflict to more than $6,000, said Linton Nightingale, deputy editor of the maritime news outlet.

Outlining the nascent container shuttle model on an industry call, Nightingale said six of the seven non-Iranian container crossings recorded in the week ending September 20 were undertaken by Abu Dhabi-backed operators.

A further four crossings earlier in September were also linked to the UAE capital, he said.

“A lot of these container crossings are now being undertaken by vessels linked to Abu Dhabi or Abu Dhabi interest,” Nightingale said.

“Gulf states have been relying on shuttle tankers to carry cargoes from inside the Gulf to outside Hormuz.

“That’s allowed international buyers to avoid sending their own vessels into a high-risk area.”

The container operators are seeking to maintain critical services connecting Gulf markets with India and Pakistan.

Arsenio Longo, founder of maritime intelligence platform Huax, said vessel movements he was tracking pointed to a container network developing around Fujairah and Khor Fakkan on the UAE’s eastern coast.

“The tanker comparison is actually quite a good one, just with the transfer happening through the ports rather than offshore,” Longo told AGBI.

Both logistics gateways appeared to be acting as hubs outside the strait, with regional feeder vessels handling the Hormuz crossings and connections inside the Gulf, he said.

Major international carriers, including Maersk, MSC and Cosco, have been serving the region through Salalah in Oman, as well as Jeddah and King Abdullah Port on Saudi Arabia’s Red Sea coast, Nightingale said.

“They’ve been combining this with feeder connections and inland transport links to serve the region,” he said.

Further reading:

• World’s largest ocean cargo carrier turns to trucks to avoid Hormuz
• Container lines reroute from Iran war to India and Sri Lanka
• UAE businesses scramble for Hormuz trade alternatives

Other cargo reaches the region through land routes via Turkey and Iraq.

But the longer, more complex logistics chains have pushed up freight costs and reduced service reliability, he said.

Keeping Gulf trade flowing

For Abu Dhabi-backed operators, priorities extend beyond the commercial calculations of international carriers, Nightingale said.

“It’s about keeping the trade moving, supporting those regional supply chains and maintaining the economic activity of the country,” he said.

He compared the response with government interventions during the pandemic, when authorities supported logistics networks to keep goods flowing.

Container crossings remain a fraction of pre-conflict levels, however, with weekly non-Iranian transits measured in single digits.

Nightingale said the emerging services amount to a “tactical adjustment” for now rather than evidence of a broader recovery.