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With ship traffic through the Strait of Hormuz at a virtual standstill, companies are scrambling to find ways to move everything from oil to fertilizer to household goods. NPR international affairs correspondent Jackie Northam has this report.
JACKIE NORTHAM, BYLINE: There’s only one way to get in and out of the Persian Gulf, and that’s through the Strait of Hormuz. With the waterway effectively closed, the flow of oil exports is taking a detour. Niels Rasmussen is chief shipping analyst at BIMCO, one of the largest member organizations for shipping companies. He says Saudi Arabia is now transferring crude oil through an east-west pipeline running across the Arabian Peninsula where it can be loaded on the Red Sea.
NIELS RASMUSSEN: Also the United Arab Emirates have increased their uses of the oil pipeline, so they’ve also been able to protect some of their exports that would normally have to move through the Strait of Hormuz.
NORTHAM: Cargo – including medicine, food, fertilizer and other necessities – is also quickly finding new routes. If the one thing the shipping industry has had to learn over the past decade, it’s how to be flexible.
ERIC JOHNSON: Anybody who’s moving goods from point A to point B, you always have to have a plan B and a plan C and a plan D, depending on the risk sort of profile of the area.
NORTHAM: Eric Johnson is senior editor at the Journal of Commerce, part of S&P Global Market Intelligence. He says the alternative plans to work around the closure of the Strait of Hormuz is to create overlying corridors connecting ports throughout the region.
JOHNSON: So you have road and even some minor use of rail kind of shipments to get around having to transit through the strait.
NORTHAM: For example, Maersk, the world’s second-largest shipping company, is shuttling goods over land to and from ports outside the Strait of Hormuz. Karsten Kildahl is chief commercial officer at Maersk. He says the shipping company has become increasingly adept at finding new routes on short notice since the supply disruption of the COVID pandemic, attacks on ships in the Red Sea and a shortage of water in the Panama Canal.
KARSTEN KILDAHL: And so when the Strait of Hormuz is closed, as it is now, within weeks, we are actually able to make the cargo flow in different ways. And I think it’s because of the practice we’ve had over these last five, six years, where we just been hit by one unforeseen event after the other.
NORTHAM: Other international shipping companies have set up sea, rail, truck networks throughout the region, including Iraq, Turkey and Kuwait. Kildahl says, all of a sudden, the roads and highways in the region are clogged with trucks.
KILDAHL: Of course, trucking capacity in the Gulf region is a bottleneck right now. And, of course, we compete with other providers to get access to the trucks that are necessary to keep an operation like this running.
NORTHAM: Still, trucks and rail cars can’t carry as much as a ship. Rasmussen, with BIMCO, says there are logistical problems with overlying caravans, particularly trucks. More will have to be imported into the region.
RASMUSSEN: I also imagine that the congestion for trucks in and out of the ports will go sky-high. And once they’re there, do you have enough truck drivers? And can you actually feasibly move that much cargo in and out of a port, or are the trucks just going to sit there and wait?
NORTHAM: Johnson, with the Journal of Commerce, says this latest crisis is prompting shipping companies to think about new trade patterns – markets that aren’t hindered by choke points like the Strait of Hormuz.
JOHNSON: If your job is to move goods, you’re going to start thinking, what are markets that we can actually access that require the least amount of transit and the least amount of political kind of turmoil that we might encounter?
NORTHAM: Like the turmoil now in the Strait of Hormuz. Jackie Northam, NPR News.
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