War is always terrible. We first think of the innocents and the suffering, hardship, and the pain that they are enduring in the Middle East. We can but hope for a speedy cessation of armed conflict.
As a shipping association we must turn to commercial shipping.
Our thoughts are with seafarers
We turn our thoughts to the wellbeing of seafarers who have gone to sea to do a job – in many cases, to support families back home – and who are now in harm’s way. We also think of all the maritime and logistics workers who are similarly threatened. We are aware of several seafarers and port workers who have lost their lives.
Several ships have been attacked with projectiles, leading to explosion and fires. These include chemical tankers, a bulk carrier and a containership.
Whenever ships are attacked in this way, there is always the possibility of the creation of an ongoing threat to navigation – which could add to the death and injury toll – and degradation of local eco-systems upon which so many people depend.
Secretary-General of the IMO
The Secretary-General of the International Maritime Organization Mr. Arsenio Dominguez issued a statement on the situation in the Strait of Hormuz earlier this week.
“I am deeply concerned by reports of at least one fatality and several seafarers injured in attacks on merchant vessels. No attack on innocent seafarers or civilian shipping is ever justified. These crews are simply doing their jobs and must be protected from the effects of wider geopolitical tensions.
“Freedom of navigation is a fundamental principle of international maritime law, and it must be respected by all Parties, with no exception.
“I am monitoring the situation closely, and I urge all shipping companies to exercise maximum caution. Where possible, vessels should avoid transiting the affected region until conditions improve. My thoughts are with the injured seafarers and their families. Their safety and welfare are our highest priority, and the IMO will continue working closely with Member States and partners to support safe navigation and to uphold the principle that civilian mariners must never be harmed,” the Secretary General said.
Chairman of the International Chamber of Shipping
His views were echoed by the Chairman of the International Chamber of Shipping, Mr Emanuele Grimaldi.
“I have been deeply concerned about the seafarers who are being put in extreme danger in the Strait of Hormuz and the surrounding region when they are simply trying to do their job. By no fault of their own, their lives are now tragically at risk. We call on all States to take the fundamental steps to ensure their safety. My thoughts are with the seafarers who have tragically lost their lives and their families, as well as the seafarers currently stranded.
“Freedom of navigation is crucial to global trade. All States must ensure the safe passage of merchant vessels, prioritising the safety and welfare of the crew on board.
“The International Chamber of Shipping is monitoring the situation closely and will continue to update its members and the wider shipping community. We all hope for a quick and peaceful resolution to this crisis.”
Disruption
Although it be trite to say, it nonetheless must be said: conflict of this nature is highly disruptive. We understand from industry bulletins and reports in the trade press that ships of all kinds and types have or are ceasing transit to / across / from the area and are instead proceeding safer waters while they await developments to unfold and for clarity. Carriers have in many cases advised shippers that cargo will be diverted to the next safe port. There may be the potential for onward inland transport – cargo owners should speak to their forwarder for further help. Forwarders should contact carriers.
There has also been a suspension of new bookings of all cargo types across the Middle East – although there are still some services to select ports. Cargo owners should speak to their freight forwarders for up-to-date information. Forwarders should contact carriers.
Altering service provision is prudent and wise given that there are drone and missile attacks upon civilian infrastructure, ships and ports.
There is widespread disruption to aviation as we know from the media who have been reporting on travellers stranded in Gulf region transit hubs. Aviation in the region is also vital to shipping for the transfer of ship crew and miscellaneous parts.
There are widespread – i.e. region-wide – closures of, and restrictions on, the operations of ports and terminals.
History – the tanker wars
It is at times like this that we can draw lessons and comfort from history. If there is anything we know about shipping, it is that it is resilient and that it will find a way. Between 1980 and 1988 the nations of Iran and Iraq were at war. There were a series of attacks against merchant shipping in the area. Tankers (and other shipping) were attacked with missiles (surface to ship, surface to air), helicopters and mines. Numerous tankers were attacked with various missiles and bombs and suffered a variety of harm including minor damage, severe damage, being set on fire, being run aground, and being sunk.
Although ships and crews were clearly at risk of destruction and death, nonetheless insurers, ship owners and crews were ready to assume the risk in return for higher monetary reward namely bigger insurance premiums, higher freight rates and hazard pay. Ocean going shipping did not stop, and was largely not severely disrupted by, the Tanker War despite being targeted for missile attacks and aerial by two highly-aggressive powers in a confined and narrow waterway over a multi-year period.
It is worth noting the comments from the Robert Strauss Center for International Security and Law at the University of Texas on this war:
“61 percent of the ships attacked during the Tanker War were oil tankers. In total, only 55 of the 239 petroleum tankers (23 percent) were completely sunk or declared as constructive total losses, compared to 39 percent of bulk carriers and 34 percent of freighters,” the authors write in their assessment (https://www.strausscenter.org/strait-of-hormuz-tanker-war).
The Robert Strauss Center also noted that, although the Tanker War led to a 25% drop in commercial shipping and a rise in the price of crude, it “did not significantly disrupt oil shipments… and the real global oil price steadily declined”.
Writing in “History Today” magazine, Martin S Navias, a teaching fellow at the Department of War Studies, King’s College London, also noted: “ultimately the Tanker War did not lead to the closing of the Strait of Hormuz, nor did it significantly impact upon oil exports from the Gulf or result in sustained increases in oil prices. According to some estimates, the combined campaigns of both Iran and Iraq never disrupted more than two per cent of ships in the Gulf”.
History – Somali piracy and Houthi terrorists
Somalia collapsed into anarchy in or about 1991. Machine gun and rocket-propelled grenade wielding pirates began hijacking commercial ships and kidnapping crew off the coast of northern coasts of Somalia, which is a very heavily trafficked waterway. Despite the dangers, Somali piracy did not stop the continuity of shipping services.
Over the last few years, shipping has come under attack in the Red Sea by terrorists who used violence against ships for their own political ends. Shipping either re-routed or continued to use the Red Sea. Shipping did not stop.
Over the last forty or so years, there have been numerous military actions, wars, and war-like actions and acts of piracy all over the world. There is ongoing armed conflict, and armed piracy, around the world all of which has the possibility of adversely affecting shipping.
Ocean-going shipping has adapted its risk management practices in each case.
Ocean-going shipping was disrupted by these conflicts, but it adapted because it is flexible and resilient. Shipping services did not stop.
We can conclude that the international commercial shipping fleet is highly resilient to international armed conflict and attacks by armed criminals.
Shipping and Australia
About 99.8% of all freight into and out of this country moves by sea (calculated by data from the National Freight Data Hub, Department of Infrastructure etc). Our top ten export trading parties by weight of sea freight in 2023-2024 were China, Japan, South Korea, India, Taiwan, Vietnam, Malaysia and Singapore in that order. None of those are Middle Eastern countries (Australian Sea Freight 2023-24, BITRE, Dept of Infrastructure).
Our top ten import trading parties by weight of sea freight are China, South Korea, Malaysia, Singapore, Japan, the United States of America, Indonesia, Thailand, Taiwan and the United Arab Emirates. Of those ten, only one, the UAE, is a Middle Eastern country and we only imported 1.8 million tonnes of cargo from the UAE in 2023-2024 compared to just under 21 million tonnes from China (Australian Sea Freight 2023-24, BITRE, Dept of Infrastructure).
Shipping Australia’s own data shows that for the five-year average ending in 2024, Australian imports and exports of full, cargo-carrying, containers to and from the Middle East was about 2.1% of the total.
While our trade volumes with the Middle East are not nothing, they are far from the most significant volumes. Our trade is with Asia.
While we wouldn’t say we are “insulated” from the Middle East conflict – everyone everywhere is going to be affected to some degree because the Middle East is a key region, and shipping is a global-spanning network-of-networks – we are one step removed.
There will be difficulties and disruption, that is inevitable. If this conflict is of a short duration, it is likely then that shipping will quickly recover.
If the conflict is long-running then shipping will adapt to the new norms, just as it did to the Houthi terror attacks, the Somali piracy crisis, the Iran-Iraq war, and to every other conflict involving attacks on shipping.
