Middle East War Disrupts Global Shipping, Triggering New Crisis for
Globalization
Beyond its effects on oil and gas, the unfolding
war in the Middle East is roiling shipping and airfreight, threatening the availability
of a vast range of goods.
1. Escalating conflict in
the Middle East has disrupted global trade routes, particularly around the
Strait of Hormuz and the Suez Canal, affecting shipping and air freight
worldwide.
2. Shipping costs have
surged sharply; transporting a container from Istanbul to Shanghai has
reportedly jumped from about $2,000 to nearly $10,000.
3. The disruption goes
beyond energy markets, affecting industries such as textiles, agriculture,
metals, electronics and food supply chains.
4. Major global brands
like Calvin Klein and Hugo Boss could face supply disruptions due to delays in textile
shipments.
5. The crisis highlights
the continued dependence of economies on global supply chains despite rising
calls for economic nationalism and self-sufficiency.
6. Oil supply disruptions
have pushed prices above $100 per barrel, raising fears of stagflation — slow
growth combined with high inflation.
7. Fertilizer supplies
from the Persian Gulf are under pressure, which could raise global food prices
and reduce crop yields.
8. Air cargo routes
between Europe and Asia are being rerouted because aircraft cannot refuel at
major hubs such as Dubai and Doha.
9. Freight costs have
surged sharply, with air cargo rates from Asia to Europe doubling since the conflict
began.
10. Experts warn that
prolonged disruptions to Middle East trade routes could trigger long-term instability
in global supply chains and higher prices for goods worldwide.
Thousands
of miles from the attacks in the Middle East, at his company’s headquarters in Toronto,
Amar Zaidi confronted what is normally a straightforward logistical task. He needed
to ship fabric from a mill in Istanbul to a customer in Shanghai.
But
the usual route involved passing through Oman via the Suez Canal — a pathway suddenly
fraught with danger. The price of booking a container ship was soaring.
Mr.
Zaidi’s company, Rebus International, makes yarn and textiles, supplying raw materials
to international clothing brands like Calvin Klein and Hugo Boss. Before the war
in the Persian Gulf, transporting a container from Turkey to China cost about $2,000,
he said. When he tried to book the journey this week, carriers demanded surcharges
that multiplied the price to $10,000.
“It’s
chaos,” said Mr. Zaidi, 52, who has worked in the industry for three decades. “It’s
the ripple effect. Everything is blamed on the war.”
Fabric
is probably not the first item that springs to mind on the list of cargo waylaid
by war. Wildly fluctuating prices for oil and natural gas are the most obvious manifestation,
a result of the effective shutdown of the Strait of Hormuz, the channel linking
the Persian Gulf to the rest of the planet.
But
the consequences of upending commerce in much of the Middle East are far broader,
and increasingly apparent in industries beyond energy. From industrial commodities
to tropical fruits, products needed in one place are getting stuck somewhere else.
The longer the hostilities persist, the greater the upheaval for shoppers and businesses
throughout the global economy.
The
reverberations amount to a rebuke of the notion that globalization is history, a
claim popularized by nationalist movements on multiple continents.
President
Trump has pursued a trade war in the name of forcing factory production back to
the United States. China and India have pursued versions of self-sufficiency. Yet
the war in the Middle East has highlighted the enduring reality of global economic
integration. Supply chains are not only intact but expanding, heightening the risks
when the movement of goods is interrupted.
“Every time we get one of these disruptions, we
have these predictions that it’s the end of globalization,” said Steven A. Altman,
a globalization expert at New York University’s Stern School of Business and co-author
of a recent study on the continued expansion of trade and investment across borders.
“The narrative is different from the reality.”
The
turmoil of the Covid-19 pandemic revealed how bottlenecks in shipping can trigger
cascading troubles. A floating traffic jam off a port in Southern California strands
chemicals needed to make paint in Delaware. It ties up containers that could otherwise
be used to load cargo in China, delaying exports of electronics destined for Ireland
and pushing up the price of moving cargo everywhere.
Such
realizations prompted companies to highlight commitments to “supply chain resilience”
alongside their usual devotion to efficiency. Retailers like Walmart shifted manufacturing
from Asia to Mexico, shrinking the distance between factories and customers to limit
their vulnerability to the hazards of global commerce.
But
the push toward more regional trade appears to be reversing, according to Mr. Altman’s
report.
From
2020 to 2023, the share of American imports arriving from Mexico and Canada increased
to 29 percent, from 26 percent. But over the first nine months of 2025, it dipped
to 27 percent.
As
the pandemic fades into memory, international companies have returned to seeking
the lowest-cost suppliers of goods, wherever they may be.
And
as the Trump administration dismantles federal programs aimed at increasing renewable
sources of energy like solar and wind power, the nation is more exposed to the implications
of higher prices for oil and gas.
All
of which means that the halting of marine traffic through the Persian Gulf is likely
to spread dysfunction widely.
The
most immediate crisis centers on energy. Tankers have
been attacked. Oil facilities have been shut down. The war has delivered “the largest
supply disruption in the history of the global oil market,” the International Energy
Agency declared on Thursday.
Not
even the concerted release of oil reserves by 30 nations could prevent the price
of oil from again breaching $100 a barrel. The prospect of a sustained increase
in energy prices has economists warning of the potential for stagflation, a term
coined to describe the impact of shocks in the 1970s: stagnant economic growth and
higher prices.
Higher
energy prices make fuel more expensive for trucks, tankers and jets, increasing
the costs of moving cargo. Larger bills for gasoline and air-conditioning leave
households with less money to spend on goods and experiences — a drag on economic
growth.
Companies
that import products into the United States, the world’s largest economy, are grappling
with confusion over the future of Mr. Trump’s tariffs after the Supreme Court ruled
that he had breached his presidential authority.
“We
have created equal if not greater uncertainty parameters than during the pandemic,”
said Nick Vyas, a supply chain expert at the University of Southern California.
“It’s a perfect storm for stagflation.”
In
Southeast Asia, producers of shrimp and tropical fruits now struggle to transport
their wares to Europe and North America. From India to Indiana, farmers are confronting
higher prices for fertilizer because of the disruption to stocks produced in the
Persian Gulf. The price of aluminum is climbing, given
impediments to shipments from Qatar and Bahrain. Helium, a critical element for
making computer chips, could soon become scarce.
“This
is not just an oil story,” Mr. Vyas said. “This is an industrial supply story.”
The
Gulf is a dominant source of urea, the leading form of nitrogen fertilizer. Making
it requires ammonia, which is produced with natural gas. So long as energy production
is hampered, the ability to make fertilizers will be constrained. Urea prices have
already climbed significantly.
If
farmers economize in their use of fertilizer, that could reduce harvests, diminishing
the supply of food and pushing prices higher. In vulnerable countries in sub-Saharan
Africa and South Asia, that could lead to greater malnutrition.
At
the center of concern is disruption to shipping lanes
and air cargo hubs in the Persian Gulf.
With
planes unable to land and refuel at major airports in Dubai and Doha on trips between
Europe and Asia, they have had to reroute, often over Central Asia. That has lengthened
journeys, requiring more fuel. And that has forced carriers to limit how much cargo
they carry.
The
cost of airfreight from Asia to Europe has doubled since the beginning of the war.
Vietnam to the United States has increased by nearly half. That has challenged the
ability of American automakers and retailers to secure electronics and components.
“Freight
rates are more volatile,” said Chloe Lee at Olympia Express, a freight forwarding
company in Ho Chi Minh City, Vietnam. “Many Vietnamese exporters are becoming more
cautious about booking shipments.”
This
is the time of year when major importers tend to negotiate yearlong contracts with
ocean carriers. Container shipping prices have been relatively cheap because of
a glut of new vessels entering the market. But now ocean carriers are absorbing
the likelihood that fuel prices will be significantly higher just as some routes
are impeded by the war.
“It’s
certainly just one thing after another in this industry,” said Ryan Petersen, chief
executive of Flexport, a global logistics company.
For
the shipping realm, the latest conflict in the Gulf is unfolding just as the last
one appeared to be fading — the strikes on ships entering the Red Sea by Houthi
rebels. Vessels moving between Europe and Asia had been avoiding that corridor,
instead traveling the long way around Africa.
In
recent months, ships had been returning to the Red Sea. Not anymore.
With
ships again looping around Africa on trips between Europe and Asia, carriers are
affixing fees and lifting prices.
That
was the situation confronting Mr. Zaidi and his Canadian textile company this week.
He
tried to ship a load of fabric to England from Pakistan. The carriers said they
could not locate shipping containers. The steel boxes were scattered at ports around
the Indian Ocean, held in place by the shutdown of marine traffic through the Middle
East.
“I’m
ready to pay whatever it costs, and I don’t have containers available for the next
three weeks,” Mr. Zaidi said.
His
company tried to ship 10 containers of machinery to Pakistan from Durban, South
Africa. It had already booked the journey at a price of $2,500 per box. The carrier
suddenly lifted the rate to $4,800. The route required a much longer run to Singapore.
The
further out Mr. Zaidi contemplated, the greater his concern grew.
If
the shipping crisis persists, cotton harvested in China may arrive late to Pakistan,
delaying his production of yarn. Mills that weave fabric in Indonesia will struggle
to find raw materials. Making clothing will get harder.
“Prices
will go up,” he said.