Capacity holds — but how resilient are Gulf ports to access risk?

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WHAT WE’RE TRACKING TODAY

TODAY: Can port capacity offset geopolitical risk?

Good morning, friends. We’re entering day six of the war that is spilling beyond the battlefield — with trade and supply chains under heightened risk. Some carriers are already moving beyond surcharges: MSC has issued an ‘End of Voyage’ for Gulf-bound cargo, while Cosco has suspended Middle East bookings as the conflict escalates.

Gulf port hubs are also feeling the squeeze (risk). After years of smooth operations — high-capacity terminals, industrial freezones, and tightly knit operations — one variable no planner can control is now in play: access.

Meanwhile, strategic pivots are underway: Saudi Arabia is rerouting Asian energy shipments to Yanbu on the Red Sea — and we dive into what this means for Hormuz in the news well, below.

Watch this space

TRANSPORT — With the Strait of Hormuz effectively shut, cargo owners are testing a workaround that swaps sea lanes for highways — and suddenly Egypt is in the middle. European shippers are increasingly exploring a land-sea transit route through Egypt after the chokepoint’s closure forced logistics planners to hunt for alternatives.

The proposed route turns Egypt into a temporary logistics bridge between Europe and the GCC. Goods arriving at Mediterranean ports such as Alexandria and Damietta are moved overland to Safaga on the Red Sea. From there, ferries carry the cargo onward to Saudi Arabia and other Gulf markets, Managing Director for Commercial Affairs at Egytrans-Nosco Hamad Nadeem told Asharq Business.

Egypt’s port operations are holding steady even as shipping routes shift: Alexandria and Damietta remain largely insulated and could help absorb cargo flows and service vessels rerouting around the Cape of Good Hope, a senior government source at the port previously told us. East Port Said has not been affected by the current tensions because it does not receive oil tankers, the source said, adding that the port is continuing to post strong performance in transit trade despite shipping agencies diverting away from the Suez Canal.

Container throughput illustrates the scale: East Port Said handled some 5.6 mn TEUs by the end of 2025 — up from 1.8 mn TEUs four years earlier, the source said.

MARITIME –– Traffic through the Strait of Hormuz has dropped by more than 95% since the outbreak of the conflict, Bloomberg reports, with the waterway now rife with signal jamming and disabled transponders. Over 140 ships are sitting idle in the strait. One tanker did make it through to the UAE's Jebel Dhanna port yesterday, per Reuters — it smells more like a one-off than a signal that we’re returning to normal. A vessel off Fujairah was struck by a projectile of unknown origin shortly after, per UKMTO.

The blockade is already backing up the system: Fujairah bunker suppliers have declared force majeure, Argus reports, after drone debris hit the Fujairah Oil Industry Zone earlier this week — jeopardizing the UAE's only bypass around Hormuz.

Why it matters: The transit serves as a real-time stress test for maritime ins. premiums and freight rates in the Gulf. For logistics managers, the successful passage of high-value cargo through the Strait without disruption could point to a way through the blockade, albeit a high-risk one.

Market watch

Oil prices surged 3% this morning as the regional war fuels fear of prolonged supply chain disruptions, Reuters reports. Brent crude futures gained USD 2.65 to trade at USD 83.99 / bbl at 05.20 GMT, while US West Texas Intermediate (WTI) increased USD 2.76 to USD 77.42 / bbl.

The Baltic Index snaps losing streak: The Baltic Exchange’s dry bulk sea freight index — which tracks rates for the capesize, panamax, and supramax vessel segments — fell 0.4% to 2,233 points on Wednesday.

Data point

Egypt’s non-oil private sector continued to contract in February, with the headline S&P Global Purchasing Managers’ Index (PMI) falling to 48.9 from 49.8 in January, according to an S&P report (pdf). The dip marks the end of a three-month expansionary streak — the longest growth streak since late 2020 — as softening demand and accelerating cost pressures forced firms to scale back operations. Despite the slip below the 50.0 neutral threshold, the reading remained above the survey’s long-run average of 48.3.

Both output and new orders saw declines in February. New orders contracted at their fastest rate in five months, with a notable drop in sales across the manufacturing, services, and wholesale and retail sectors. Construction was the lone bright spot, reporting an improvement in order volumes amid the broader slowdown.

The big culprit? Input costs. Average price pressures went up substantially, hitting their highest level since May 2025. Businesses reported being squeezed by a surge in global prices for oil and metals, which drove up import expenses. While costs are soaring, most firms are reluctant to pass those hikes onto customers, choosing instead to eat the difference and let their margins take the hit, according to David Owen, senior economist at S&P Global Market Intelligence.

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Chokepoint checkmate

Can capacity solve a geopolitical problem? A port is built to control variables — turnaround times, capacity, expanding freezones. But conflict introduces an uncontrollable variable: access. The Gulf perfected the art of operational efficiency, now it’s being tested on whether this efficiency matters when the route itself is unstable.

The Gulf’s port hub model rose by combining geography with predictability — high liner connectivity and capacity, industrial freezones, inland logistics integration, and mainline frequency. Its strength wasn’t only location near key chokepoints; it was also the embedded network centrality. Location opened the door, but reliability built the moat.

On hard numbers: DP world pegs Jebel Ali at 19.4 mn TEU annual capacity, while AD Ports’ Khalifa processed some 6.6 mn TEU last year at roughly 69% utilization. Oman’s Salalah — positioned outside Hormuz — completed a USD 300 mn expansion, raising container capacity from 4.5 mn to 6.5 mn TEU, but its vulnerability sits around carriers rerouting the Red Sea and Gulf region entirely.

When a port gets hit by congestion, you throw productivity at it, but when a port gets hit by access risk, that’s a different story. Maersk, CMA CGM, and Hapag-Lloyd recently suspended Hormuz transits and some are routing specific services around the Cape of Good Hope to avoid Bab el-Mandeb and Red Sea risk.

That combination targets ports along two dimensions at once: First, the ability to physically access the Arabian Gulf, and second, the economics of continuing to route capacity through a war-risk premium zone instead of shifting outside it.

Infrastructure only works if the service strings feed it: If mainline rotations omit the Gulf entirely, all the cranes, capacity, and berth depth become secondary. A hub is powerful because it sits inside the loop; outside the loop, it’s just capacity waiting for a call. In situations like this, the lever isn’t terminal capability, it’s carrier routing logic.

Surcharges are doing what geopolitics always does: repricing geography. War-risk premiums in the Gulf jumped sharply within days. Maersk published the “Emergency Freight Increase” for cargos to/from several Gulf markets, with increases of USD 1.8k–3k, alongside CMA CGM and Hapag-Lloyd publishing similar conflict-linked costs.

And some carriers are already moving beyond surcharges toward outright network adjustments: MSC issued an “End of Voyage” declaration for shipments bound to the Arabian Gulf — meaning cargo currently under its custody could be diverted to the next safe port of discharge rather than delivered to its original Gulf destination. It also imposed a USD 800 per container surcharge to cover deviation cost.

Cosco suspends Middle East bookings as regional conflict escalates: Chinese shipping giant Cosco has also suspended all vessel bookings on Middle East routes effective immediately — with no timeline for when services might resume. The decision comes as regional conflict continues to disrupt maritime stability in the area.

When moving through Hormuz costs materially more than moving around it, the detour stops looking inefficient — it starts looking rational. If a hub’s access requires a war-risk premium plus an energy cost in such a context, carriers start redesigning around safer nodes — even if the “old hub” is operationally excellent.

Alternative hubs aren’t winning yet — but they’ve gained optionality. “The age of the mega‑hub is not over, but the age of the disconnected mega‑hub is,” former head of supply chain and transport industries at the World Economic Forum Wolfgang Lehmacher tells EnterpriseAM. If carriers redesign strings to terminate in the Mediterranean, India’s west coast, or hybrid relay models that sit outside the chokepoint geometry, the effect can become sticky — network changes aren’t easily reversed (as we’ve seen in the Red Sea).

That doesn’t mean structural displacement — yet — but it does mean carriers are proving they can operate without a single chokepoint anchor, and optionality is the first step toward diversification.

What can ports do to stay inside the network?

Expand capacity outside the chokepoints. Several Gulf operators are pursuing this strategy through global terminal portfolios to capture cargo flows that shift elsewhere. AD Ports runs or holds stakes in critical terminals including the Port of Luanda in Angola — perfectly suited around the Cape’s route — and the Karachi Gateway Terminal in southern Pakistan on the Arabian Sea. DP World also runs London Gateway in the UK, Limassol in Cyprus, Dakar in Senegal, alongside Jeddah on the Red Sea.

Strengthen feeder networks: If mainline vessels avoid the Gulf temporarily, ports can maintain connectivity through feeder shipping. Cargo can move from to hubs in Med or India before being carried into Gulf ports on smaller feeder vessels. This increases cost and transit time, sure, but keeps the region connected even when direct mainline calls decline.

Go for port-to-land corridors: The Gulf hinted at such a strategy with regards to Red Sea disruptions, but now the chokepoints switched. Distribution networks could start assessing alternative rail routes — including corridors through Saudi Arabia — but such networks still remain a long-term vision.

Parallel routes or lost markets: “Boards should know by now that if they are not prepared or able to pay for spare capacity and parallel routes, they will pay with lost markets the next time the map changes overnight,” Lehmacher said

What to look for

Where does business stand? DP World confirmed all four terminals at Jebel Ali are operating normally after a brief suspension. AD Ports also confirmed its terminal and logistics operations remain fully operational. There have also been no confirmed reports of tenants in the Jebel Ali Freezone invoking force majeure clauses so far.

Keep your eyes open: The market will reveal whether this is a volatility spike or a rerouting system. Watch carrier behavior, including resumption, and ins. normalization. The decisive variable is whether carriers choose to circle back to Gulf calls.

The ports that gain will be those that can say, credibly and consistently, “We may not always be the cheapest route in a good year, but we are the route that still works when several bad things happen at once, and then prove it in their design, contracts and performance,” Lehmacher told us.

Bypassing Hormuz

Saudi Arabia is rerouting Asian energy shipments to Yanbu on the Red Sea, Reuters reports, citing three insiders. The move could elevate the port from a secondary terminal to a key east-west gateway. Rising costs tied to Hormuz — from higher ins. premiums to security risks — are forcing a major rethink of regional logistics, though the exact volume of supplies being shifted to Yanbu is still unclear.

Who’s involved so far?

Egypt has offered its Sumed pipeline –– Ain Sokhna to Sidi Kerir — to facilitate the transfer of Saudi crude oil from Yanbu to the Mediterranean, effectively creating a land-to-pipe bridge, a government source told EnterpriseAM. This would avoid potential ins. premiums associated with Red Sea sailings. A notable concern for commercial shipping after the threat of Houthi attacks on commercial vessels has sharply escalated since the tensions began earlier this week.

The pipeline isn’t a like-for-like replacement for Hormuz: Its capacity is much lower, former Oil Minister Osama Kamal tells EnterpriseAM. Instead, “Sumed could provide a temporary solution” to help Aramco fulfill its contracts with European offtakers, former Egyptian Natural Gas Holding Company head Medhat Youssef told us.

“Don't expect the Suez Canal to recover for at least six months,” Arab Academy for Science, Technology, and Maritime Transport VP Mohamed Daoud told EnterpriseAM. Shipping agencies announce their schedules three to six months in advance, depending on the nature of each shipping line, and therefore book cargo and ports. “Thus, even after the war ends, the impact will continue for at least six months until a different decision is made.”

Pakistan has urged the kingdom to provide an alternative supply route for its petroleum, eyeing Yanbu as a potential solution amid ongoing disruptions. Saudi Arabia reaffirmed it was securing supplies through the channel during a meeting between Pakistan’s Petroleum Minister Ali Pervaiz Malik and Saudi Arabia’s ambassador to Pakistan Nawaf Al Malki.

They aren’t wasting any time: The Pak-Arab Refinery Company (Parco) secured two 70k-barrel crude oil cargoes via alternative routes that bypass the Strait of Hormuz. The first was transported through Saudi Arabia’s East-West Crude Oil Pipeline to Red Sea export terminals, while the second was loaded at the Fujairah Port in the Gulf of Oman. By securing these routes, Parco — which handles 120k barrels per day — has extended its crude stock cover to March 25, ensuring it remains at full operational capacity despite the regional bottleneck.

Why this matters

Major crude oil storage sites in the Kingdom are filling up quickly, as Saudi’s key export route through the Strait of Hormuz remains closed to shipping, geospatial analytics company Kayrros co-founder Antoine Halff said on LinkedIn. Four out of six tanks at the Ras Tanura refinery are already full, and the Ju’aymah terminal on the country’s east coast is “quickly running out of space.”

REMEMBER- A 25-day countdown started on Monday, marking the time Middle East oil producers have before they run out of storage space, according to analysts at JP Morgan. If the strait remains closed beyond this window, producers may have to stop output entirely because there will be nowhere left to put the oil.

The kingdom has spent bns expanding its East-West pipeline and Yanbu South Terminal on the Red Sea. For operators, this is a stress test for Saudi Arabia’s land bridge ambitions. By bypassing Hormuz, Riyadh is attempting to insulate its trade flows from regional volatility while positioning the Red Sea coast as the more stable, cost-effective hub. If Yanbu can handle the surge, it could offer a way to decouple the GCC’s economy from the narrow chokepoint of the strait.

Some hurdles to overcome

The Saudi East-West pipeline moves 5 mn bpd — far less than the 20 mn that normallypass through Hormuz. However, it stands as the most viable alternative for the Kingdom at present, with overland corridors, like the International North-South Transport Corridor, lacking the TEU capacity to handle diverted Suez traffic that the Cape of Good Hope can handle.

Could Egypt serve as a lifeline? The Sumed pipeline has a 10k bpd capacity and currently transports 5k bpd. “Sumed could provide a temporary solution,” petroleum expert and former head of the Egyptian Natural Gas Holding Company told EnterpriseAM.

Aramco currently has contracts running for the operation of the pipeline and owns several storage facilities, along with other unnamed companies. Sumed will “play a significant role in fulfilling contracts between Aramco and European countries by utilizing its capacity to reach the Mediterranean via the Sumed terminal to Sidi Kerir, and from there to ships at the ports of Alexandria and Dekheila,” he explained.

How much can Saudi Arabia’s pipeline really handle? While the East-West Pipeline has a standard nameplate capacity of 5 mn bpd, Aramco proved it could stretch this to 7 mn bpd, when it temporarily expanded its capacity in 2019 amid tensions in the Gulf. The real question is whether pumping stations — many of which have been upgraded over the last decade — can maintain the 7 mn bpd throughput sustainability if the blockade of Hormuz lasts for months rather than weeks.

It’s all a trade-off: The 7 mn bpd figure was a temporary sprint, in which the kingdom used NGL lines for crude. This was a logistical trade-off, as it reduces the country’s ability to move gas liquids to its petrochemical hubs and power plants.

If Saudi Arabia can’t hold 7 mn bbl / d, it will face a bottleneck — meaning only around a quarter of its total production would be able to safely bypass Hormuz. Asian buyers — the primary market for this crude — will have to weigh up the risk versus reward of this move.

The GCC’s supply issues aren’t limited to Hormuz — refineries and storage facilities are at risk of attack. This leaves a key issue — even if alternative supply routes are secured, as long as energy infrastructure faces attack, supply could be snagged or take a literal hit at any moment.

While petroleum logistics have a workaround, the same cannot be said for LNG. South Asia’s reliance on Qatari gas remains tethered to the strait, as Saudi Arabia lacks comparable Red Sea LNG export infrastructure.

What’s next?

Easing away from a reliance on Hormuz? “I would consider this only a short-term solution until the conflict ends,” Equity Research Analyst at Gabelli Funds Jens Zimmermann told EnterpriseAM. That said, tension always has the potential to flare up again. “I could imagine that Saudi could invest in building more pipeline capacity to the Red Sea. That would take time, but could be considered a ‘long-term solution’ to diversify its export channels,” Zimmermann added.

We’re watching out for Asian supply contracts. If China and India follow Pakistan’s lead, Saudi Arabia’s Red Sea initiative could become the most viable option to bypass Hormuz.

The disruption will hit Asian markets hardest, as they uptake 45.7% of their total crude load and 29.5% of their gasoline via the strait. Countries like Japan, China, and India — which rely on the Middle East for the vast majority of their crude — are facing immediate supply gaps as tankers are unable to exit the Gulf.

We’re waiting to hear more about the volume being funneled through the pipeline. This will indicate how reliant Saudi Aramco plans to be on its East-West Pipeline to facilitate this Red Sea pivot.

Background

The math for a Suez-Hormuz bypass is catastrophic for margins. Rerouting Indian or Gulf exports around the Cape of Good Hope adds 15 to 20 days to transit times — but the bigger shock is the war-risk premium, which has jumped from 0.025% to 0.5% of vessel value in just a matter of days. With Brent crude surging to USD 130 per barrel on Hormuz closure fears, the delivered cost of goods is no longer predictable — exporters who paid USD 300 for a container to Dubai are now starting at USD 1.2k.

Supply chains reel as war spreads across the Gulf

The war is spreading further afield on day six, with shocks rippling across aviation, energy, and critical commodities as the Hormuz crisis begins to hit global supply chains.

Airspace remains restricted

Aviation hubs remain restricted, and major carriers are extending flight suspensions:

Emirates has suspended flights until Saturday, 7 March, operating a limited number of journeys, Gulf News reports;
Etihad Airways is suspending all flights to and from Abu Dhabi until 6 March;
Air Arabia halted flights until Monday, 9 March, including flights to and from Sharjah and Abu Dhabi, Dubai Eye reports;
Flydubai announced a partial resumption of scheduled flights, with limited flights operating from terminals 2 and 3 at Dubai International Airport.

Fujairah is coordinating some chartered flights, working with Oman’s SalamAir to run journeys between Fujairah International Airport to India, Turkey, and Pakistan through Oman yesterday and today, according to Arabian Business.

Force majeure declared across gas and aluminum

Global gas shock: As Hormuz disruptions mount, Qatar declared force majeure on all gas exports, and the state energy giant QatarEnergy (QE) halted all liquefied natural gas (LNG) production this week, according to a post on X. With Qatar supplying 20% of the world’s and 80% of Asia’s LNG, the move is likely to put global gas markets in a weeks-long shortage.

QE indicates a minimum four-week recovery timeline, Reuters reports, citing sources familiar with the matter. The production halt has driven European and Asian gas prices to multi-year highs.

Aluminum is also taking a hit: Aluminium Bahrain declared force majeure yesterday, Reuters reports — leading aluminum prices to rise by as much as 5.1% to USD 3.4k per ton. This figure could still rise if the closure persists, with 8% of the world’s aluminum supply coming from the Bahraini smelter. The news comes after Qatari smelter Qatalum said it was shutting down operations earlier in the week.

The disruption in the Strait of Hormuz was behind the closure, a spokesperson told the newswire, adding that the firm is unable to resume shipments, even as production continues as usual, and that it was looking into alternative shipping options.

Crude output at risk across Iraq, Kuwait and the UAE

Iraq and Kuwait could begin shutting down crude production if Hormuz remains closed, with some 3.3 mn bbl / d at risk, Reuters reports, citing JP Morgan. Iraq has some three days, while Kuwait has about two weeks before storage fills and shipments grind to a halt.

Shutdowns are already underway, with the UAE’s Dana Gas temporarily suspending production at Iraq’s Kor Mor field due to concerns over the ongoing regional security situation, according to a statement (pdf). Production will halt until further notice while the company monitors the ongoing situation.

Aramco’s Ras Tanura was targeted by an attempted drone strike yesterday, the Defense Ministry said on X. The attack came two days after a previous drone strike temporarily shut down the refinery. Officials said there was no damage and no disruption to supplies. And in the early hours of the morning the ministry said it intercepted and destroyed drones east of Al Kharj.

Stretch the disruption and the numbers climb: Losses are estimated to reach 3.8 mn bbl / d around day 15 and 4.7 mn bbl / d by day 18 if the closure persists, according to the bank.

The concern isn’t in vain –– GCC energy sites have come under fire. Oman’s Duqm port and Salalah Port faced drone attacks earlier this week. Over in the UAE, oil storage tanks in Fujairah were hit by falling debris, resulting in a fire at the JSW terminal.

Over in India: The crude oil flow disruptions have pushed Mangalore Refinery and Petrochemicals to declare force majeure on all gasoline export cargoes scheduled for March and April. The state-run refiner, which operates a 300k bbl / d facility in Karnataka, had already awarded two to three cargoes for early March loading and is now negotiating with buyers to settle the supplies.

Egypt’s El Araby eyes export growth through USD 480 mn factory push

El Araby targets export growth + localization with multi-mn-USD investment

El Araby Group is planning a USD 480 mn expansion in New Quesna City over the next five years, according to an Industry Ministry statement. While details about the homeware appliances manufacturer’s plan for the city are few and far between, what we do know is that it targets increasing exports and the ratio of local components used in production, which it claims already reaches 90% for some of its products.

Calendar

2026

MARCH

9-13 March (Monday-Friday): World Cargo Alliance Worldwide Conference, Singapore.

10-12 March (Tuesday-Thursday): World Cargo Symposium, Lima, Peru.

18-19 March (Wednesday-Thursday): IntraLogisteX, Birmingham, United Kingdom.

18-19 March (Wednesday-Thursday): Green Marine Transport Conference, Amsterdam, The Netherlands.

26 March (Thursday): Gulf Ship Finance Forum, Dubai, UAE.

APRIL

12-15 April (Sunday-Wednesday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

16-17 April (Thursday-Friday): Global Supply Chain and Logistics Summit, Amsterdam, The Netherlands.

28-30 April (Tuesday-Thursday): Mediterranean Ports and Logistics, Porto, Portugal.

MAY

12-14 May (Tuesday-Thursday): The Airport Show, Dubai, UAE.

12-14 May (Tuesday-Thursday): Aviation Energy Forum (AEF), Paris, France.

19-21 May (Tuesday-Thursday): Ground Handling Conference (IGHC), Cairo, Egypt.

19-21 May (Tuesday-Thursday): Terminal Operations Conference & Exhibition, Hamburg, Germany.

JUNE

2-4 June (Tuesday-Thursday): ProPak Mena, Cairo, Egypt.

6-8 June (Saturday-Monday): IATA World Air Transport Summit, Rio de Janeiro, Brazil.

22-23 June (Monday-Tuesday): Decarbonizing Shipping Forum, Rotterdam, Netherlands.

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TODAY: Can port capacity offset geopolitical risk?