As Israel and Iran exchange airstrikes, geopolitical tensions in the Middle East are rising. If the situation prolongs, shipping rates for container ships may also be stimulated, and companies like HMM and Pan Ocean are expected to benefit, iM Securities explained on the 16th.
Previously, navigation through the Red Sea has been restricted due to the influence of the pro-Iranian Houthi rebels in Yemen. Container shipping companies are choosing routes that divert around the Cape of Good Hope in South Africa. There is an effect of approximately 11% increase in demand on the ton-mile indicator, which signifies how much cargo is moved over how far.
Bae Se-ho, a researcher at iM Securities, noted, "The current situation could affect a general increase in shipping prices due to the reduction in shipping capacity, and there is potential for container ship rates to rise further depending on tariff negotiations between the U.S. and China."
The crux is whether Iran will blockade the Strait of Hormuz. The Strait serves as a passage connecting the Persian Gulf and the Gulf of Oman, with more than 20% of the world's crude oil and liquefied natural gas (LNG) traveling through here.
The width of the Strait of Hormuz is between 39 km and 96 km, but due to its depth, the actual usable width for navigation is around 9 km to 10 km. The entry and exit routes, along with buffer zones, are each divided into roughly 3 km. The entry route to the north lies within Iran's territorial waters, while the exit route to the south falls within Oman's territorial waters.
If Iran blocks the Strait of Hormuz, ships will only be able to pass through Oman's territorial waters. As the channels narrow, delays in operations are inevitable. This could significantly lead to a decrease in supply, raising the likelihood of maritime freight rates increasing.
However, Researcher Bae evaluated the blockade of the Strait of Hormuz by Iran as an extreme scenario. This is not welcome news for China, which imports the majority of Iran's crude oil.
Researcher Bae stated, "43% of China's maritime crude oil imports and 24% of its LNG imports are conducted through the Strait of Hormuz," and added, "If Iran were to blockade the Strait, it would need to coordinate with China." He continued, "Iran has indicated the possibility of blocking the Strait of Hormuz three times since 2008, but there has been no actual blockade," and assessed that considering the relationship between Iran and China, actual execution of an Iranian blockade of the Strait of Hormuz would be deemed an extreme scenario.