Global Shipping Costs Surge as Hormuz Disruptions Hit Key Trade Routes

The Middle East crisis has reverberated through major global shipping chokepoints far from the Strait of Hormuz, increasing traffic through the Panama and Suez canals and pushing shipping costs higher, according to OilPrice.com.

Demand for alternative shipping routes has risen as tanker traffic through the Middle East's main oil and liquefied natural gas export route is disrupted.

With tanker traffic through the Middle East's main oil and liquefied natural gas export route disrupted, more energy cargoes have been moving through alternative routes.

Some vessel operators have reportedly been willing to pay millions of dollars at auction to secure specific Panama Canal transit slots.

OilPrice.com reported that auction prices for Panama Canal slots had reached as much as $5.3 million, while waiting times had risen to 17 days.

The broader tanker market has also come under pressure, with charter rates for some vessels exceeding $1 million a day. The Panama and Suez canals have faced higher demand as shipping companies adjust to disruptions around Hormuz and the Red Sea.

Longer voyages, rerouted cargoes and limited tanker availability have contributed to higher transportation costs.

The Panama Canal is also dealing with restrictions caused by below-average rainfall and the expected effects of a strong El Niño weather pattern.

Daily transits were reduced to 34 vessels beginning Sept. 4 and to 32 from Sept. 15. Reuters reported that rainfall in the canal watershed from May through August was 34% below average, while inflows were 44% below normal.