Insurance rates spike 50% as shippers avoid Strait of Hormuz

2026-03-08 - 01:53

Three commercial ships were attacked in or near the Strait of Hormuz, according to a March 1 AFP report. (AFP pic) PETALING JAYA: War-risk insurance rates for ships operating in the Gulf have surged by up to 50%, as operators seek to avoid the Strait of Hormuz, according to Port Klang Authority general manager K Subramaniam. He warned that the added costs could drive up freight charges and, in turn, domestic prices. Shipping costs to and from the Middle East, including insurance for vessels and cargo, are expected to rise further as risks in the region escalate. Subramaniam said shipping lines were already adopting a tougher stance on Gulf-bound cargo. “Lines are not accepting cargo to Persian Gulf ports,” he told FMT, adding that some operators were also avoiding the strait to “safeguard crew.” Subramaniam warned that cargo ships could face greater risk because they are easier to target than warships. He said Iran may retaliate to recent US-Israeli aggression by going after commercial vessels in the Persian Gulf, describing them as “easy targets.” He said the full impact should become clearer within a week, with access to the Jebel Ali and Khalifa ports in the United Arab Emirates potentially “severely restricted, if not completely cut off.” “We have considerable trade with Jebel Ali, a major hub for the Middle East and Central Asia,” he said. Port Klang’s exposure to global conditions matters because it is now among the world’s biggest container gateways — ranked 10th in Lloyd’s List’s latest global container port league table after handling 14.64 million twenty-foot equivalent units in 2024. On March 1, AFP reported that three commercial ships were attacked in or near the Strait of Hormuz. Reuters has since reported further incidents, including a Malta-flagged container ship being hit on March 4 and other vessels damaged, as shipping firms seek to steer clear of the route. This comes after economists warned that prolonged disruption to traffic in the strait could push up fuel and shipping costs for Malaysian exporters and importers, lifting prices at home and adding to Putrajaya’s fuel subsidy bill. Ports brace for container pile-up Subramaniam said shipping lines and agents are already checking whether Port Klang can hold export containers bound for the Middle East for longer periods if sailings are cancelled. He said there were also enquiries about short-term storage for Middle East-bound containers, including containers already loaded at ports in China and elsewhere in North Asia. Penang Port Sdn Bhd CEO V Sasedharan said the port is offering spare space to help ease pressure if cargo gets stuck or ships turn back. He said the port, whose container yard is less than half full, has room to store extra containers, and is already in talks with shipping firms about diverting cargo to Penang if sailings are disrupted. “We are happy to provide temporary storage relief for those who need a transition point,” he said.