Commercial shipping analysts are giving wary support for the U.S. and Iran’s temporary peace agreement signed this week, but warn that even if it holds, a return to full container shipping volumes remains at least three months away.
Global maritime cargo flows in the region have been backlogged for months, due to Iran’s action to close the crucial waterway in retaliation for the U.S. and Israel launching a war against the nation in February.
The recent U.S.-Iran deal should allow a return of container shipping to the Strait of Hormuz, according to ocean and air freight intelligence platform Xeneta. But the sheer scale of disruption caused by the extended blockade means that even in a best-case scenario, a recovery of ocean supply chain networks wouldn’t occur until mid-September, and spot rates are forecasted to rise for at least another four weeks before the market peaks.
“This agreement should be greeted with realism and extreme caution,” Peter Sand, chief analyst at Xeneta, said in a release. “Even if the ceasefire holds, around 10% of global container shipping capacity is impacted by the blockade and freight rates are spiralling across major trades. This scale of disruption and market volatility cannot be reversed overnight.”
The exact timeline and mechanics of the reopening remain uncertain, according to a statement from Judah Levine, head of research at Frieghtos. Even with a reopening, a full return to normal traffic and an oil market recovery are expected to happen only gradually over the coming months, he said.
One reason for the delay is that vessel operators will be hesitant to rush back into the dangerous waters. To date, the Internation Maritime Organization (IMO) has verified at least 46 attacks against international shipping in and around the Strait of Hormuz since the conflict began on February 28.
As well as restoring freedom of navigation through the international passage, the interim peace deal will also provide time for the IMO to advance its plan to evacuate the thousands of seafarers stranded in the area, since many were not allowed to disembark their ships while the embargo held. “The Organization is working in close collaboration with Member States and partners to implement this plan safely and effectively. However, its implementation will require time to ensure that all necessary safety and security guarantees are in place,” IMO Secretary-General Arsenio Dominguez said.
The World Shipping Council (WSC) said it would follow a similar plan in coming days. “The immediate priority is safe passage for the seafarers and ships still stranded in the area,” WSC President & CEO Joe Kramek said. “That will require coordination between states, the IMO, and industry, backed by the necessary safety and security guarantees. Coordinated risk assessments, mine mitigation operations, and vessel traffic operations should be prioritized as part of these efforts.”
