Hormuz Strait Crisis Could Impact 10% of Global Container Capacity

Today we refer to the March 4 article from Kaiji Press and examine the risk of a Hormuz Strait blockade and its potential impact on global shipping and supply chains.

Watch the Video Here

The “Worst-Case Scenario” According to ONE

At an international conference held in Long Beach, ONE CEO Jeremy Nixon described a possible blockade of the Hormuz Strait as “the worst-case scenario among the risks currently imaginable.”

According to the report, more than 700 vessels are currently delayed in waters surrounding the Strait.

Among them are approximately 100 container ships.

However, the impact goes far beyond the vessels directly delayed.

Service disruptions, cascading schedule delays, and congestion at major hub ports have collectively resulted in around 10% of the global container fleet being affected.

This represents a significant disruption to the global logistics network.

Why the Impact Is Spreading

The Hormuz Strait is one of the world’s most critical maritime chokepoints.

Around 30% of seaborne crude oil and about 20% of global LNG shipments pass through this narrow corridor.

Due to escalating geopolitical tensions, obtaining war risk insurance has become increasingly difficult.

Without adequate insurance coverage, shipowners face significant financial exposure, making it extremely difficult to send vessels through the region.

Reports from Reuters and Bloomberg also indicate that maritime insurance premiums in the Middle East are rising sharply, while shipping lines are suspending services to the region.

Many carriers, including ONE, have already paused bookings for Middle East routes.

Cargo originally bound for the region is now accumulating at major hubs in Europe and Asia, triggering congestion and further reducing effective shipping capacity.

Oil at $100 and Supply Chain Disruption

If the situation persists, the consequences could be severe.

Nixon warned that if the Hormuz Strait remains closed for 21 to 25 days or longer, production facilities in the Middle East may run out of storage capacity and be forced to reduce output.

This could push crude oil prices above $100 per barrel.

Higher oil prices would directly increase bunker fuel costs for ships.

Ironically, the container shipping market is currently experiencing a surge of new vessel deliveries, which would normally lead to excess capacity and declining freight rates.

However, with around 10% of global shipping capacity effectively immobilized, the market is experiencing the opposite effect.

• Rising fuel costs
• Reduced effective shipping capacity

These two factors together could push freight rates higher or keep them elevated.

ONE’s Strategy and AI Initiatives

In response to the uncertain environment, ONE is focusing on improving service reliability.

Instead of focusing solely on on-time arrival, Nixon emphasized improving the “DAB (Delivered As Booked)” metric, which measures whether cargo arrives according to the originally promised schedule.

The company is also leveraging AI to enhance:

• Container demand forecasting
• Stowage planning
• Weather-based route optimization

ONE aims to achieve at least 5% efficiency improvement annually across the industry.

Under its long-term strategy “ONE2030”, the company also plans to expand its fleet capacity to approximately 3 million TEU.

Conclusion

The Hormuz Strait situation is not merely a regional geopolitical issue.

It is a global risk that could affect oil prices, freight rates, and supply chains worldwide.

In addition, approximately 40,000 seafarers are estimated to be affected by the crisis, highlighting its humanitarian dimension.

Shippers and logistics professionals should begin reassessing supply chains that depend on Middle East routes and consider long-term risk hedging strategies against potential freight volatility.