Mideast Shipping Crisis Deepens
The closure of the Strait of Hormuz and Red Sea has now effectively shut down Jebel Ali, one of the world's largest transshipment hubs. This leaves Salalah as the Middle East's only accessible major container port. The fallout for global liner networks is acute, with carriers scrambling to reroute, creating major knock-on effects for Caribbean port congestion and schedules.
The shutdown of Jebel Ali port removes a massive capacity from global trade; the port handled 15.5 million TEUs in 2024, a one million TEU increase from the previous year. This volume accounted for nearly 18% of DP World's total global container throughput. The port's advanced infrastructure supports major international projects, including handling 45,000 metric tons of humanitarian aid shipments in 2024. The two chokepoints now closed, the Strait of Hormuz and the Red Sea, are critical energy and trade arteries. Roughly one-fifth of the global oil supply and liquefied natural gas passes through the Strait of Hormuz daily. Meanwhile, the Suez Canal, connected to the Red Sea, handles about 12% of global trade and up to 30% of global container shipping volumes. Rerouting vessels from the Suez Canal around Africa's Cape of Good Hope adds approximately 7 to 12 days to a ship's journey. This diversion increases fuel consumption and can lead to container shortages as vessels take longer to complete their voyages, tightening global capacity. The longer transit times particularly impact just-in-time manufacturing supply chains. The sole remaining major hub, the Port of Salalah in Oman, has been expanding to handle increased traffic. A $300 million investment is set to increase its annual container handling capacity from 5 million to 6 million TEU. In 2025, Salalah's container terminal handled 4.3 million TEUs, a significant increase from 3.3 million TEUs the prior year. For supply chains into the Caribbean, these disruptions compound existing issues. The Panama Canal is already facing congestion and transit restrictions due to water scarcity, impacting trade between Asia and the eastern United States. This forces some operators to divert to the Suez Canal or the Cape of Good Hope, adding thousands of kilometers to voyages and putting further pressure on logistics networks. The ripple effects are felt in increased freight costs and potential inflation on imported goods. Shipping rates on major routes, such as Asia to Europe, have surged, and insurance premiums for vessels have also risen due to the heightened risks. These added costs are often passed on to consumers, impacting the price of goods.
