Strait of Hormuz transit gradually accelerates, easing high shipping costs

The US-Iran deal-led ship traffic in the Strait of Hormuz will gradually increase, resulting in a noticeable easing in the spot market, marking “not a sharp collapse but rather a gradual and fluctuating normalization,” an industry representative told Anadolu.

Bilgehan Engin, president of the Turkish Forwarding and Logistics Association (UTIKAD), stated that the easing of Middle East tensions with the signing of a memorandum between the US and Iran on June 14, which entered into force four days later, led to a gradual normalization of transit through the Strait of Hormuz.

The fragile agreement called into question the conditions under which the vital waterway could be reopened to commercial shipping.

Shipments through the Strait of Hormuz picked up pace after the agreement as the tensions paralyzing the logistics sector since the end of February eased, while uncertainty in global supply chains and high risk premiums are expected to decline.

Prior to the war, some 130 commercial vessels transited the Strait of Hormuz. Traffic came to a standstill after Feb. 28, when the US and Israel launched joint pre-emptive strikes on Iran, and Tehran retaliated in subsequent attacks. Traffic through the strait remains 70% below pre-war levels following a noticeable uptick after the deal came into force.

Engin stated that surging freight rates, insurance costs, and risk premiums influenced the global maritime transport market throughout the year, as spot freight rates, especially for tankers and containers, reached historic highs.

“While insurance costs are falling, freight rates aren’t declining at the same pace due to the persistence of structural cost factors,” he said, noting that the risk premium has not completely disappeared at key transit points but has instead been repriced within a lower range, fueling expectations that the bottom level in the spot market will be significantly above pre-crisis levels.

“Shipowners and major logistics firms are revising high-priced long-term contracts signed during the crisis through index-linked and flexible structures open to renegotiation,” he said. “In fixed-price contracts, sudden changes are limited due to the legal framework, but new-term contracts are shifting to a lower risk premium and a more balanced pricing structure.”

He noted that the sector is adopting a more cautious stance in the medium term despite short-term spot declines to take into account persistent risk premiums.

Engin stated that the rerouting around the Cape of Good Hope during the crisis artificially increased ton-mile demand in global maritime transport, leading to a temporary capacity crunch.

“The reversal of the rerouting will not lead to a severe supply shock on its own but instead to a gradual easing in the spot market and a more competitive pricing environment with narrowing margins. In the long term, the market will look for a new balance, establishing a new price floor dependent on demand growth and fleet discipline,” he said.

He noted that heightened risks around the Strait of Hormuz during the war pressured port operations along the Persian Gulf and Red Sea routes, and while some ports partially lost their function as transit hubs, transshipments via alternative routes increased costs and transit times.

“These ports, through the normalization process, are expected to reintegrate into mainstream trade routes. Gulf ports especially will enter a phase of rapid recovery in energy exports and Asia-bound container flows, but the persistence of security concerns in the Red Sea may lead to a more gradual recovery,” he said. “Meanwhile, near-shoring and multimodal corridors evolved from temporary solutions into strategic diversification tools, as major firms moved towards hybrid models with rail, short-sea shipping, and regional distribution centers on the Asia-Europe route as a permanent feature.”

He added that the return to stability in the Strait of Hormuz may make traditional maritime routes appealing once again, but it will not eradicate alternative corridors, as global supply chain management relies on cost optimization, risk diversification, and supply security in the aftermath of the crisis.

*Writing by Emir Yildirim