Strait of Hormuz shockwave - R1bn a day cost to SA

Key topics:Hormuz conflict strains shipping, vessels stranded, capacity tightCosts surge: fuel, insurance, surcharges raise global freight pricesSA hit via delays, higher transport costs, inflation and inefficiencies.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By BizNews Reporter.Global supply chains are taking another massive blow following the onset of conflict in the Strait of Hormuz. The latest state of logistics report, issued by weekly the Southern African Association of Freight Forwarders (SAAFF) paints a sobering picture of the mounting toll across ocean, air, and road modalities.Approximately 800 vessels have been stranded in the Persian Gulf since the onset of the conflict, while more than 1,500 ships have been affected at Hormuz. With carriers adopting automatic identification system (AIS) suppression, alongside an estimated 58 vessels or 310,000 TEU remaining diverted or sheltered, global maritime capacity has tightened significantly.SAAFF’s Head of Research, Dr. Jacob van Rensburg, explained that while South Africa is not directly exposed in the same way as Gulf-linked trade lanes, the secondary effects are material. These pressures are largely driven by surging fuel costs, shifting carrier behavior, escalating insurance risks, and intensifying landside logistics bottlenecks. .Read more:.Ray Dalio: It all comes down to who controls the Strait of Hormuz — The “Final Battle".Crucially, South Africa is experiencing secondary effects and is not benefiting from the increased redirected vessel traffic around the Cape of Good Hope. This comes on top of existing logistics constraints and an opportunity cost that sees the country losing close to R1 billion per day due to existing logistical inefficiencies.The Ocean and Air FalloutRerouting vessels around the Cape of Good Hope adds thousands of nautical miles depending on the lane and rotation, extending average transit times by 10 to 14 days. Clearing the massive backlog of affected vessels will take weeks to months. If mines are present or suspected, hydrographic verification and clearance could add weeks before insurers and carriers accept routine passage. Full restoration could range from weeks to several months, depending on security guarantees, insurance acceptance, port congestion, and carrier network reinstatement. Furthermore, long-term disruption to Qatar's Ras Laffan hub, which accounts for around 20% of global liquefied natural gas (LNG), carries material implications for global LNG supply.These delays come at an immense financial cost. Additional War Risk Premiums have surged from between $10,000 and $20,000 up to $150,000 to $500,000 per voyage, while Cape reroutes add $200 to $400 per TEU. Major carriers—including Hapag-Lloyd, Maersk, CMA CGM, and MSC—have applied Emergency Bunker Surcharges, alongside emergency fuel surcharges ranging from $122 per TEU up to $265 per TEU for reefers. Locally, Transnet Port Terminals (TPT) will apply a R52-per-container Fuel Neutrality Charge from 1 May 2026. This is based on the 7 April 2026 coastal diesel price of R25.04 per litre, which falls within the established R23.50 to R27.00 per litre threshold.Air freight has suffered an equally brutal shock. Global air cargo capacity immediately dropped by approximately 18%, before recovering to a 4.7% year-on-year contraction in March. The Middle East accounted for the majority of this decline. Because fuel accounts for 30% to 40% of airline operating costs, a 96% surge in jet fuel prices between February and March 2026—climbing from $99.40 to $195.16 per barrel—sent freight costs soaring. Rates out of Johannesburg jumped 60% month-on-month and 7% year-on-year. Overall, total international air cargo in South Africa contracted by 9% year-on-year in March 2026 compared with March 2025. Compounding this, aviation fuel stocks remain tight, standing at 3.89 days at Cape Town International Airport, 4.5 days at OR Tambo, and 15.3 days at King Shaka.Upstream Pressures on the RoadWhile domestic road transport is relatively insulated from direct disruption of the Hormuz disruption, it faces intense upstream cost pressures. Fuel makes up 30% to 45% of total road transport operating costs. With inland 50ppm diesel at R32.30 per litre and coastal diesel at R31.54 per litre, alongside inland 95 petrol at R26.63 per litre and coastal petrol at R25.76 per litre, operators are carrying a heavy burden. June 2026 forecasts indicate further fuel price hikes, which will raise road cost indexes.Landside bottlenecks are being significantly amplified, as South African rail remains under strain and port inefficiencies cause cascading landside delays. Consequently, higher transport costs for food, fertiliser, and consumer goods feed directly into consumer price inflation (CPI). Globally, declining manufacturing output combined with elevated prices introduces a distinct risk of stagflation..Read more:.SA’s Iran stance risks heavy diplomatic and economic cost: Katzenellenbogen.Data confirms that domestic transport activity had improved prior to the latest shock. The Ctrack Transport & Freight Index rebounded to 125 in the first quarter, with road freight specifically recovering by 5.9%. However, Ctrack warns that the April fuel price shock poses a material risk to sustained logistics momentum, placing renewed pressure on road freight operators.Strategic De-riskingTo navigate this volatility, SAAFF encourages members to actively review contractual exposure, routing options, surcharge mechanisms, and lead-time assumptions. Specific de-risk mechanisms for freight forwarders and shippers include:Proactively reviewing force majeure clauses across all contracts with clients and carriers immediately.Verifying war-risk insurance coverage, noting that war risks are excluded under the ICC(A) clause 6.Planning for extended lead times, rather than assuming near-term normalisation.Communicating surcharges clearly to clients to avoid unexpected cost surprises, while closely monitoring Bunker Adjustment Factors (BAF).Activating multimodal backup freight plans for urgent or high-value shipments, and exploring alternative gateway ports..At a strategic national level, the crisis highlights the necessity to accelerate port modernisation, utilise improved domestic port throughput—such as Durban container volumes growing 6.2% in the first quarter of 2026—and diversify energy import sources to reduce the heavy 60% to 80% dependence on Middle Eastern oil and diesel.

Strait of Hormuz shockwave - R1bn a day cost to SA

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