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The boss of the world’s biggest freight forwarder has said using land routes to transport goods into the Gulf is not a sustainable alternative to voyages through the Strait of Hormuz because of extra costs and delays.
The comments by Stefan Paul, chief executive of Kuehne+Nagel, come as concerns persist that Iran could close the waterway again in the future, prompting logistics groups to explore ways to reduce reliance on the choke point.
“A trucking solution can never be sustainable from a mid- and long-term perspective,” Paul told the FT. “If you look at the sheer mass of a container ship versus the trucking demand, there’s always a shortage.”
Road transport became a vital means of supplying Gulf countries after the US and Israel attacked Iran in late February, leading to the closure of the strait as Iran struck commercial vessels.
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The shift led to congestion in ports outside the Gulf and routes for transporting goods over land that have stretched as far as Turkey and Jordan. Lorries can haul a maximum of two 20ft containers at a time, while the largest container ships carry more than 20,000.
The boss of Switzerland-based Kuehne+Nagel said demand for trucks had pushed lorry hire costs to almost $8,000 per month, about 25 per cent higher than before the war started. Trucks queued for miles, particularly at border crossings such as from Oman into the United Arab Emirates.
“As soon as the strait will be open . . . the land bridge is not so much needed anymore,” Paul said.
His views underscore diverse opinions in logistics industries about whether land routes will become a permanent fixture in the Gulf after Iran demonstrated its ability to close the strait at will.
CMA-CGM, the French container line, this week said it had signed a deal with Omani logistics provider Asyad Group to co-develop and manage a new $400mn logistics facility in Sohar, a port to the north of Muscat that was used heavily during the conflict.
Chief executive Rodolphe Saadé said that the Omani partnership would “strengthen regional connectivity while securing reliable inland access to key trade corridors”.
Freight forwarders have also touted the advantage of a long-planned railway crossing in Saudi Arabia to connect the port of Jeddah on the Red Sea to the kingdom’s Gulf ports that started being built last year.
Peter Sand, chief analyst at the freight analytics company Xenata, said container shipping routes into the Gulf would not be a “carbon copy” of what they were before the war.
Companies would use multiple transport modes even as these added to transit times because that “insulates the long-haul network from future disruption,” he said.
Lars Jensen, chief executive of the consultancy Vespucci Maritime, said operators were likely to revert to previous networks because using trucks was more expensive.
“It’s all about money. It is a lot more cost-efficient to sail the cargo rather than truck it.”
Paul said future shipments into the Gulf would probably arrive through the Saudi railroad and shipping through the Strait of Hormuz.
About 30,000 shipping containers were stuck in the Gulf at the start of the conflict, while 84 ships remain inside the strait, Paul said.
Some 350,000 containers were also displaced overall and were now needed in Asia where demand has increased ahead of a fresh round of US tariffs, he added.
“We have roughly 350,000 containers which are somewhere sitting around the [Gulf] ports or in India or in African ports and these . . . are missing now from a steel box perspective in Asia to cover the additional demand which came in a couple of weeks ago,” he said.
With an increasing number of ships now passing through the strait thanks to the US and Iran’s 60-day ceasefire, Paul said that bookings for the Gulf had improved. But they were still 50 per cent down on levels before the conflict broke out.
Additional reporting by Sarah White in Paris
