The Weekly Roar
In this week’s Roar: How the war in Iran is disrupting trade, the DHS shutdown, the Shipper Conditions Index drops, diesel prices are skyrocketing, and the EU keeps an eye on sustainability.
The impacts of the war in Iran are spreading. Unsurprisingly, ocean carriers continue rerouting traffic to alternate ports and overland connections to ovoid the Straight of Hormuz and Red Sea. This is causing congestion upstream for supply chains in India and other parts of Asia. Freight rates out of China are rising, and so are war surcharges, but the overall market rates are still holding below previous years’ highs. In related news, President Trump has suspended the Jones Act which is a U.S. law that requires goods shipped between American ports to be carried on ships that are U.S.-built, owned, and crewed. The intent is to allow foreign ships to help move goods more quickly and cheaply between U.S. ports as oil prices continue to rise. How impactful this decision will be is to be determined, however.
The Airforwarders Association is warning that the DHS shutdown is putting a strain on TSA staffing and risking more disruptions to U.S. air cargo operations and supply chains. More than 300 TSA officers have resigned, and the longer things remain this unstable, airport access may be hindered, along with cargo processing and predictably. This is an important issue that is coming to a head, while being overshadowed by the Iran conflict.
The benchmark U.S. Shipper Conditions Index (SCI) could soon plunge to its lowest point since 2022, a sign that extremely unfavorable conditions for shippers are on the horizon. Driven by an already tough market and instability caused by geopolitics, the industry is fearing even greater surges in diesel prices and tightening trucking capacity. Domestically, shippers are staring down rising freight rates and increased risk of bottlenecks. There is not a lot of optimism in the report, which includes the statement these are “the most unfavorable market conditions ever for shippers.”
In line with expectations, U.S. diesel prices blew past $5 a gallon last week, which is the highest it’s been since December 2022. With the closure of the Strait of Hormuz disrupting the global energy supply, diesel fuel, agriculture, and construction costs are quickly rising for shippers and consumers. The spike is also rippling through Europe and Asia, prompting governments to restrict fuel exports.
There are still some positives happening in parts of the global supply chain. The European Commission has updated its state aid rules, aiming to speed up funding for greener rail, inland waterway, and multimodal transport projects. The new LMTG and TBER frameworks simplify and speed up approvals, making it easier for EU member states to quickly invest in sustainable, efficient, and connected transport. It also supports fair competition and helps small operators.
For the rest of the week’s top shipping news, check out the article highlights below.
