The recent escalation in the Strait of Hormuz is triggering an immediate reassessment of Total Cost of Equipment (TCE) and counterparty stress across global supply chains. The Strait of Hormuz is one of the world's most critical maritime chokepoints, carrying around a quarter of global seaborne oil trade, which equates to roughly 20 million barrels per day. However, ship transits through the Strait have come to a near halt, plummeting from an average of 129 daily transits in February. Coupled with renewed vows from Houthi forces to restart Red Sea attacks, the resulting operational paralysis is fundamentally altering global freight rates and container supply/demand models. For sophisticated freight forwarders and NVOCCs, the primary focus must shift immediately to P&L impact and asset utilization over the 2025–2028 horizon. Here is how this geopolitical chokehold dictates the container market.
For container owners and traders, these developments lead to key changes in overall market expectations. Here is how this geopolitical chokehold dictates the container market.
The Capacity Squeeze and the "End of Voyage" Threat
This disruption is effectively soaking up available capacity across both vessels and container fleets as turnaround times stretch and expected equipment positions are thrown into disarray.
Crucially, major carriers are aggressively mitigating their own liability by declaring "end of voyage" for Middle East-bound cargoes.
- Due to the ongoing instability, carriers like Maersk are officially invoking Clause 20 of their Bill of Lading, which permits the modification or termination of the carriage contract.
- Carriers are dropping boxes at the nearest safe port—for example, dumping UAE-bound boxes in Mundra, India, or Colombo, Sri Lanka—and asking the shipper what they want to do with the cargo.
- The shipper is then stranded, forced to arrange collection and onward transportation.
- On dry land, trucking and logistics costs to move goods onward to the UAE range from $4,000 to $9,000 per container.
This operational friction traps equipment for extended periods, skyrocketing D&D exposure (Demurrage & Detention) and artificially suppressing the pool of available boxes. Capacity is not just delayed; it is actively being soaked up by administrative and logistical dead-ends.
Second-Hand Container Prices: An Unexpected Floor
For the secondary market (As-is, WWT, CW), this geopolitical friction provides an unexpected stabilizing mechanism. Previously, our models anticipated a "high supply, sliding prices" environment for second-hand containers due to the looming capacity overhang. That thesis must be revised. Carriers and leasing companies, facing trapped equipment and extended transit times, will refrain from aggressive resale into the secondary market. Instead, they will tightly hold onto the containers currently in their fleets to buffer against ongoing supply chain shocks.
This holding pattern is reinforced by the sheer scale of the disruption, which extends far beyond the energy sector:
- The Middle East is a significant global provider of petrochemicals, fertilizers, and metals such as aluminum.
- Trade flows worth billions of dollars could be jeopardized, with aluminum and plastics as particularly at-risk upstream components for countless finished goods.
- These secondary supply chain effects might persist longer than the underlying regional conflict, as recovery operations may focus first on restoring energy exports rather than downstream manufacturing capabilities.
With global supply chains bracing for prolonged scarcities and logistical delays, the artificial scarcity protects the residual value of trading assets. While secondary market prices may still deteriorate slightly, the downward curve will be significantly flatter than previously anticipated.
Newbuilds and the Accelerating SOC Advantage
Looking at factory production, we expect limited immediate impact on newbuild container prices, largely due to two countering macroeconomic effects: demand-driven factory price increases versus surging repositioning credits.
However, the business case for SOC (Shipper Owned Containers) is becoming undeniably attractive. Faced with massive COC (Carrier Owned Container) rate hikes and severe restrictions on container availability at primary load ports, carriers have a growing vested interest in utilizing third-party, one-way equipment rather than risking their own boxes in volatile lanes.
- Shipping companies are unwilling to take the risk of moving through the Strait of Hormuz, and have slapped $4,000 surcharges per container destined for the entire Middle East.
- To cover constraints and increased operating costs, Maersk has implemented an Emergency Freight Increase of $1,800 per 20' Dry container and $3,000 per 40' Dry/HC container.
- For Reefer, Special, Out-of-Gauge, and Dangerous Goods containers, the emergency increase jumps to $3,800 per unit.
Depending on which macroeconomic effect dominates the newbuild sector, we will see marginal factory price adjustments. However, the immediate takeaway for forwarders is clear: with COC costs spiraling out of control, leveraging SOCs to secure lane-level savings and hedge against carrier BoL abandonments is no longer just an optimization tactic—it is a critical requirement for risk mitigation.
Sources
- [1] CNN Business: The Strait of Hormuz is about more than just oil. It feeds 100 million people
- [2] Maersk: Strait of Hormuz Closure - Emergency Freight Increase
- [3] Global Trade Magazine: Strait of Hormuz Disruptions Threaten Global Supply Chains Beyond Oil
- [4] UNCTAD: Strait of Hormuz disruptions - Implications for global trade and development