Shipping companies are facing mounting uncertainty and escalating costs as hundreds of vessels remain stranded in the Persian Gulf, with no clear resolution in sight for the reopening of the Strait of Hormuz more than two months into the Iran war.
Trump's 'Project Freedom' Halted
On Sunday, President Donald Trump announced 'Project Freedom,' a U.S. initiative to 'guide' ships through the strait. Two vessels successfully transited, but by Tuesday, Trump abruptly paused the effort to allow time for a potential deal to end the conflict. Meanwhile, the risks for ships and crew remain significant. A container ship operated by CMA CGM Group was damaged during an attack while attempting to cross the strait, the French shipping company confirmed on Wednesday. Concerns about Iranian speedboats and drones continue to deter major ship owners and operators, who deem the waterway too dangerous.
'Ultimately, it's still going to come back to the primary issues of risk and safety that shippers have to evaluate,' said Sean Pribyl, a maritime attorney at Holland & Knight in Washington, D.C. 'It seems as though we're not anywhere near to returning to a free flow of traffic and navigation through the strait.'
Stranded Goods and Crew
Before the conflict, between 100 and 135 vessels passed through the Strait of Hormuz daily, according to Lloyd's List Intelligence. Now, traffic has slowed to a trickle as Iran requires vessels to undergo a vetting process by the Islamic Revolutionary Guards Corps (IRGC), which involves passing near the Iranian coast, submitting crew and cargo information, and in some cases, making payments. However, paying the IRGC risks violating U.S. and EU sanctions, as both have designated the group a terrorist organization.
Goods stranded in the strait include oil and oil products such as fertilizer, along with thousands of ship workers. Air Force Gen. Dan Caine, chairman of the Joint Chiefs of Staff, said Tuesday there are over 1,550 vessels with approximately 22,500 mariners inside the Persian Gulf. To pressure Iran, the U.S. Navy is enforcing a blockade outside the strait in the Gulf of Oman and the Arabian Sea.
Insurance Costs Skyrocket
Insurance costs for vessels in the region have surged due to the heightened risk of attack. Ed Anderson, a professor of supply chain and operations management at the University of Texas's McCombs School of Business, noted that war risk insurance premiums have jumped from less than 1% of the value of goods on a ship to between 3% and 10% during the conflict. Despite this coverage, most shippers consider the crossing too unsafe. 'Ferrying out a couple of ships has not really affected the shipping industry in any way whatsoever,' Anderson said.
Companies Assess Costs and Risks
Hapag-Lloyd AG, one of the world's largest container shipping companies, reports that the Hormuz situation is costing it $60 million per week, driven by soaring fuel and insurance prices. The company operates a fleet of 301 ships, four of which are stranded in the Persian Gulf. It has suspended some services and sought alternative routes via safe harbors or land transport. 'These options are however limited in capacity and cannot completely replace the regular maritime routes through the region,' the company stated.
Maersk confirmed that its U.S.-flagged vehicle carrier Alliance Fairfax exited the Persian Gulf through the Strait of Hormuz on Monday, accompanied by U.S. military assets. 'The transit was completed without incident, and all crew members are safe and unharmed,' the company said.
Long Road to Normalcy
Oil prices and shipping are unlikely to stabilize until the risk of attacks in the Strait of Hormuz clearly recedes, according to Kaho Yu, head of energy resources at risk intelligence firm Verisk Maplecroft. 'Even with diplomatic engagement continuing, energy markets are unlikely to return quickly to pre-crisis assumptions,' he said. 'Refiners, shippers, and commodity traders will remain cautious until there is clearer evidence that Hormuz disruptions will not re-escalate.'
A meeting on Wednesday between Iranian and Chinese diplomats emphasized de-escalation, but Yu noted that 'Hormuz remains the real metric that will be watched. Tanker traffic and energy flows over the coming weeks and months are likely to matter more than diplomatic language in assessing whether Beijing can translate influence with Tehran into practical stability.'
Razat Gaurav, CEO of supply chain management company Kinaxis, warned that even if a ceasefire holds and ships gradually resume transits, shipping will not 'snap back overnight.' He explained, 'Even when conditions improve, carriers, insurers, and shippers need confidence that stability will hold before capacity and routes fully normalize. Air cargo can recover relatively quickly, but ocean shipping typically takes weeks or months because of longer lead times and contractual constraints.'
Gaurav added that shipments of goods like liquefied natural gas and sulphur, where the Middle East is a major supplier, are likely to move faster as backlogs clear, but 'most shippers will remain cautious until stability proves durable.'
