Global and Local Trade Updates for Australian Importers and Exporters

Dear Valued Clients,

the below update provides information on the implications resulting from recent escalations in the conflict between Isreal and Iran.

Israel–Iran Tensions and Maritime Security Outlook

The recent intensification of hostilities between Israel and Iran has broadened the regional security landscape, now encompassing not only the Red Sea but also the Strait of Hormuz and surrounding Middle Eastern airspace. While no confirmed attacks on commercial vessels in the Gulf have occurred, the elevated threat environment is prompting stricter security measures and economic repercussions.

Red Sea Disruption and Shipping Implications

• As of mid-June 2025, the Red Sea disruption has persisted for over 570 days. Major carriers continue to bypass the Suez Canal, favoring the Cape of Good Hope route despite a 15% toll reduction offered by the Suez Canal Authority.
  • Carriers previously considering a return to the Suez route are expected to delay such plans.
  • CMA CGM, which had been trialing Suez transits, may soon announce a full withdrawal from this route.
• According to Loadstar, Israel’s latest strike on Iran poses a potential threat to container vessels in the Strait of Hormuz. Although commercial traffic remains unaffected for now, reports suggest Iran’s Parliament is weighing a complete closure of the strait—an action that would mark a major escalation.
• The Strait of Hormuz, a critical artery for 20% of global oil shipments, has seen increased security alerts. The UK Maritime Trade Operations (UKMTO) has flagged electronic interference and raised threat levels.
  • Oil prices have surged 7–9% amid fears of supply disruption, with Brent crude reaching $74.23 per barrel and WTI climbing nearly 5%.
  • Carriers may respond with emergency Bunker Adjustment Factor (BAF) increases.
• Maersk and Hapag-Lloyd have introduced new surcharges on Middle East–USEC lanes, reflecting rising operational costs tied to regional instability.
• Shipping companies are reassessing exposure to Gulf transshipment hubs like Jebel Ali and Port Khalifa, with potential ripple effects across Asian port networks.
• The conflict is expected to disrupt trade flows for Saudi Arabia and the UAE, potentially causing congestion in broader Asian logistics corridors.
• Iran’s continued detention of the MSC Aries for over a year underscores its willingness to interfere with commercial shipping.
• Haifa Port is experiencing operational delays due to air raid alerts and labor shortages. Simultaneously, concerns are mounting over access to Iranian ports such as Bandar Abbas.

Air Cargo Developments

• Airlines have rerouted or suspended flights over Israel, Iraq, Iran, and Jordan, leading to longer transit times and reduced cargo capacity. This is particularly affecting time-sensitive shipments like electronics, perishables, and pharmaceuticals.
• Extended flight paths are driving up operational costs, which may be passed on to customers through higher freight rates.

Strategic Implications

The Israel–Iran conflict marks a transition from isolated incidents to a systemic threat across vital trade corridors. While longer Cape routes are now standard, the broader concern lies in escalating volatility—from oil price fluctuations and Gulf port delays to constrained airfreight capacity and rising insurance costs.

Although the Strait of Hormuz remains open, the possibility of closure and increasing electronic interference reports have heightened perceived risks. Given the strait’s role in global oil transit, any disruption would have far-reaching consequences. BAF surcharges could spike in anticipation of volatility, even without physical blockades. Carriers are also reevaluating their reliance on Gulf transshipment hubs, which could lead to congestion across Asia’s port infrastructure.

Impacts for Australia

For supply chains in Australia , the implications include prolonged upstream disruptions, reduced sourcing reliability from Europe and the Middle East, and mounting cost pressures. These include higher insurance premiums, BAF and rate surcharges, disrupted feeder services, and tighter capacity across both import and export lanes.

Businesses should consider hybrid air-sea routing via Asia for European shipments—especially for FMCG and other time-sensitive goods—where partial air solutions can help maintain reliability with manageable cost increases.

If you have any questions or would like to discuss how these developments may affect your business, please don’t hesitate to reach out to Robert Crabtree, Mike Delfino or Rosalie Kelly.

VoxGroup is a market-leading international trade consultancy, customs and logistics company. For further information contact us on (02) 8036-8450 or send us a message via www.voxgroup.com.au