Conflict in the Middle East puts pressure on maritime routes and raises concerns at the Port of Santos

Although geographically distant from the conflict, global ports such as Santos end up feeling the effects, says logistics specialist Lúcio Lage (Alexsander Ferraz/AT)

The war involving the United States, Israel, and Iran is affecting global maritime transport, although the impacts are still concentrated on routes in the Persian Gulf, in the Middle East. Major shipping companies have adopted contingency measures, restricting the number of vessels and the cargo entering and leaving that region. Contacted by A Tribuna , they did not provide details on the number of vessels or goods affected on routes via the Port of Santos.

The main point of concern is the Strait of Hormuz, in the Persian Gulf, through which about 20% of all oil transported worldwide passes. “Any tension there generates an immediate impact on maritime trade. Shipping companies and insurers become more cautious, insurance and freight costs increase, and some routes begin to operate with greater risk and instability”, says logistics specialist Lúcio Lage.

The escalation of the conflict has led, among other factors, to the halt or drastic reduction of navigation in the region, the retention of dozens of tankers in anchorage areas, attacks on commercial vessels, and the cancellation of insurance coverage, according to insurance lawyer Tatiana Algodoal.

“Beyond the Strait of Hormuz, the effects spread to other strategic corridors, such as the Red Sea and the Suez Canal, which connect Asia and Europe; the Bab el-Mandeb Strait, which separates Asia and Africa, linking the Red Sea to the Gulf of Aden and the Indian Ocean; and Asia–Europe and Asia–Americas routes, affected by diversions, rescheduling of port calls, and increased logistics costs.”

Companies

Maersk has suspended bookings involving reefer (refrigerated) cargo to and from the United Arab Emirates, Oman, Iraq, Kuwait, Jordan, Qatar, Bahrain, and Saudi Arabia. “For shipments containing essential food, medicines, and perishable goods, we will do our best”, the company stated.

Dry cargo bookings had also been suspended, according to Maersk, to and from the United Arab Emirates, Iraq, Kuwait, Qatar, Saudi Arabia (Dammam and Al Jubail), Oman (Sohar), and Bahrain, with the same note regarding shipments of food, medicines, and perishable items.

CMA CGM had closed all import bookings to Iraq, Kuwait, Qatar, Bahrain, Saudi Arabia, and the United Arab Emirates. However, the company has since reopened orders.

MSC did not respond to inquiries from the report. On the 9th, the company had announced the suspension of exports to the Persian Gulf. “All shipments in transit will be diverted to the next safe port of discharge. At that location, the cargo will be unloaded and made available to customers for local delivery and pickup”, it said. MSC also indicated the application of a mandatory surcharge of US\$ 800 per container for all affected shipments to cover diversion costs.

Silence and attention

When contacted on the matter, the Centro Nacional de Navegação Transatlântica (Centronave), which represents 19 shipping companies, did not comment. In a statement, the Autoridade Portuária de Santos (APS) said it is “closely monitoring the evolution of the situation in the Middle East”, but that “so far, there is no indication of direct impacts on the maritime routes operating at the Port of Santos.” The federal public company added that its operations board has been holding periodic meetings to monitor the situation.

“It is important to consider that maritime logistics today is global and highly integrated, which means that regional tensions can generate indirect effects, such as route adjustments or operational rescheduling. In wartime scenarios, it is difficult to predict all developments, even when geographically distant”, APS noted.

Iran receives more than 30% of exported corn

Corn stands out among the goods exported to Iran via the Port of Santos. The equivalent of 30.51% of shipments of this commodity from the Santos complex are destined for that country, according to data from the Autoridade Portuária de Santos (APS).

Another product requiring attention, but in terms of imports, is urea, according to APS. It is the main nitrogen fertilizer used by farmers.

It is applied to crops such as corn, wheat, cotton, and sugarcane, all of which require nitrogen and contribute to increased productivity.

“For Santos, the most important transmission channel is the fertilizer and chemical inputs chain. The port has relevant infrastructure for unloading bulk minerals, including fertilizers, sulfur, and salt, and several terminals dedicated to this profile”, recalls the executive coordinator of Aliança Procomex, John Edwin Mein.

Although Iran has little weight in agricultural input imports via the Port of Santos (only 0.01% of the total), other Persian Gulf countries account for more than 40% of urea imports at the Santos complex, with Qatar standing out (34.5%).

“The most likely effects are more expensive fertilizers or less certain delivery”, Mein reinforces.

Losses have not been calculated

Experts consulted by A Tribuna are unanimous in stating that it is still too early to measure direct and consolidated losses for the Santos port complex. The duration of the conflict will be an important parameter.

“Geopolitical conflicts usually impact energy prices and logistics costs first, and only later does this become more clearly visible in international trade. If tensions persist, then we may begin to see more concrete effects on operations and cargo flow”, notes logistics specialist Lúcio Lage Rodrigues.

Insurance and reinsurance lawyer Tatiana Algodoal agrees and calls for close attention. “The conflict is still recent and dynamic, and the initial effects are concentrated on costs, insurance, and logistics planning, rather than stoppages in Brazil. Financial impacts, in turn, tend to appear gradually. Therefore, the current scenario requires attention and monitoring, and it is not possible to quantify potential losses at this time”, she recommends.

The executive coordinator of Aliança Procomex, John Edwin Mein, believes that the effect in Santos is likely to be felt first in prices rather than volume. However, he considers it possible to say that Santos “is exposed to the shock, especially through fertilizers, chemicals, fuels, and logistics costs; and that we may feel early signals: insurance, bunker fuel, diesel, delays, and supply risk.”

But, according to him, it is still not possible to project losses at the Port without March and April statistics, shipping company notices, and cargo movement data. “Today, we can say that the most immediate risk for Santos is not stoppage, but becoming more expensive and more uncertain”, he summarizes.

Large scale

Although geographically distant from the conflict, global ports such as Santos end up feeling the effects, says logistics specialist Lúcio Lage.

“The first impact is usually the increase in oil prices, which is already putting pressure on fuel costs worldwide, including in Brazil. As bunker fuel—the fuel used by ships—becomes more expensive, this tends to raise maritime freight costs and affect imports and exports,” summarizes the director of Process Log & Comex.

Main axes

Insurance lawyer Tatiana Algodoal notes that the potential impact does not stem from a physical shutdown of the Port, but from the exposure of Brazilian foreign trade to international maritime logistics. According to her, it can be analyzed based on three main axes.

One is energy and logistics dependence. “A significant portion of the fleet operating in Santos uses fuel whose pricing depends on Middle Eastern oil, and increased operating costs may reduce the frequency of port calls or increase freight costs.”

If diesel and bunker fuel remain under pressure, the effect spreads to storage, inland transport, distribution, and the costs of agriculture and industry served by Santos, analyzes the executive coordinator of Aliança Procomex, John Edwin Mein. “We may see rescheduling of time windows and port calls—not because Santos is closed or under military threat, but because ships, insurers, and trading companies begin to arbitrate cost, risk, and tonnage availability on a global scale.”

The cargo profile perspective comes second on the list, according to Tatiana. “The Port of Santos is highly dependent on agribusiness. Brazil is one of the largest agricultural exporters in the world and imports significant volumes of fertilizers from the Middle East, whose transport may be affected by conflicts impacting the Strait of Hormuz, without which crop production may be affected,” she explains.

Finally, according to the lawyer, there is also insurance risk. “The cancellation of war coverage and the increase in premiums may make some operations economically unfeasible, even outside the conflict zone”, she states.

Low to moderate

Mein assesses that the risk for Santos can be classified as low to moderate in the very short term for the Port’s physical operations, and moderate to high for costs and specific supply chains, especially fertilizers, chemicals, fuels, and cargo highly sensitive to freight rates.

“Santos does not physically depend on the Strait of Hormuz to operate on a daily basis, but it does economically depend on global supply chains that pass through it. And the Port is large enough to feel any change in prices and vessel availability”, he concludes.