Freight transport costs from Asia to Middle East reach record high - report

Freight rates on the Shanghai to Gulf and Red Sea route hit record highs this week, surpassing even the peaks reached during the Covid-19 pandemic, Financial Times reported, citing sources.

Companies have warned of severe backlogs and extra charges, as shipping lines use alternative land routes to try to ease congestion caused by the near closure of the Strait of Hormuz.

Shipments bound for the Middle East at the start of the Iran war remain stranded in ports as far away as India and Mozambique, with businesses facing thousands of dollars in extra costs despite efforts by major shipping lines to find alternative routes.

The cost to ship a standard 20ft container (TEU) on that route increased from $980 before the outbreak of the war to $4,131 in the week to May 15, according to data provider Clarksons Research. The highest cost during the pandemic was $3,960 per TEU in 2021.

“Both the Saudis and the Iraqis have opened up for a lot of trucks coming from Iraq, from Jordan, from Turkey even," the report reads.

Trade flows into the Gulf region had fallen by between 60% and 80%. One shipping industry lawyer said ports were being forced to prioritise essential goods such as food and medical supplies.