Chinese Forwarders Face Mideast Decline, Costs Soar Amid Hormuz Strait Block

April 17 — Amid ongoing instability in traffic through the Strait of Hormuz, freight forwarding businesses operating in the Middle East from China have seen a sharp decline in demand, with their operational costs nearly tripling.

The volume of business through the Middle East has been cut by at least 50%, a situation unprecedented in the past decade, according to Li Hao, a sales manager at an international freight forwarding company in Guangdong Province.

While demand for non-essential consumer products has dropped significantly, the need for essential goods—such as daily necessities and basic construction materials—remains steady, Li noted.

Consequently, numerous factories in Yiwu, a Chinese city famous for being a global hub for small commodities, are experiencing order shortages. “Over the past month, some companies have seen their orders from the Middle East decline by half compared to the same period last year,” said Xu Yan, president of the Yiwu Cross-Border E-Commerce Association.

Freight partners across the globe are facing similar challenges, primarily rerouting shipments departing from China to alternative ports like Khor Fakkan and Fujairah in the United Arab Emirates to avoid conflict zones and maintain steady cargo movement.

Major shipping firms, including Mediterranean Shipping, Maersk, and CMA CGM, have either suspended or modified their routes through the Middle East, causing a surge in freight and insurance charges. Additionally, numerous ships are stranded in the Persian Gulf.

Experts in freight forwarding explain that sea-land intermodal routes through the UAE are key alternatives for Chinese goods entering the Middle East. However, this fallback comes with high costs, reduced efficiency, and persistent issues such as port congestion.

Shipping a standard container from Shanghai to the Middle East previously cost around USD 3,000 to USD 4,000, according to a route manager at a large Chinese freight forwarding firm named Chen. Now, the base shipping rate has increased to USD 5,000 to USD 6,000, and with surcharges, it can escalate to as much as USD 11,000.

The rise in shipping expenses is driven not only by climbing international oil prices but also by added surcharges like the war risk fee, due to the uncertainties stemming from the ongoing conflict, Chen explained.

Data from shipping companies indicates that these additional costs are largely passed on to clients, intensifying pressure on merchants who are already experiencing weak order volumes.

Industry insiders emphasize the importance for freight forwarders and foreign trade enterprises to actively evaluate the potential chain reactions triggered by increased port and route adjustments, transshipment, and supplementary fees. This proactive approach is vital to managing current shipping risks.

Additionally, companies should enhance communication and coordination with shipping providers and agents, allocate sufficient logistics budgets, and adapt delivery schedules flexibly to navigate the ongoing shipping crisis and minimize operational losses, experts advise.