By Gavin van Marle – After cancelling bookings to ports in the Middle East Gulf yesterday, Jeremy Nixon, CEO of ONE, spoke at the S&P Global TPM event in Long Beach about the growing backlog of container cargo.

“The immediate halt on bookings means there are already containers checked in at terminals that won’t be loaded onto ships now. This will cause problems for port operators regarding space utilization and the smooth operation of their terminals,” he said.

“Carriers will have to prioritize empty containers and rearrange other cargo too.”

“So yes, this will definitely affect freight rates, fuel costs, and the imbalance of equipment,” he added.

“You might think, ‘Well, he's a carrier, of course, he would say that’ – but if you look back at similar events and analyze the data, it would suggest the same potential disruptions,” he noted.

Nixon also highlighted three main consequences of the closure of the Strait of Hormuz for container shipping.

“We’re now on day three, and the immediate effects are that war insurance has been removed, meaning no ships can pass through as they can’t insure their assets there.”

“Secondly, fuel prices are sharply rising, and thirdly, most carriers have stopped taking bookings for the Middle East. This is a major trade route, and cargo will start piling up at hubs in Europe and Asia.”

Nixon explained that ships heading to the Middle East will have to divert cargo to places like Colombo, Fujairah, and other ports.

Turloch Mooney, head of port intelligence at S&P, mentioned that the closure is already causing disruptions.

“We are witnessing significant disruption and congestion at South Asian ports like Mundra, Mumbai, and Colombo, as Jebel Ali is completely non-operational and cargo has been redirected.”

He added that reopening the Strait of Hormuz would likely lead to further congestion: “These vessels are stuck and can’t move.”

“Once a safe window opens and those ships start moving, they will all reach their destinations at the same time, overwhelming port operations – from the perspective of the ports, it’s a disaster,” he said.

Nixon reminded attendees that other factors are also in play beyond container shipping.

“If the Strait of Hormuz remains closed for 21 to 25 days, production in the Middle East will have to slow down since they won’t have anywhere to store the oil and gas.”

“We’re looking at a significant oil price shock. Prices could reach $100 a barrel, resulting in a surge in energy costs and higher bunker fuel prices worldwide.”

“There’s also the human aspect to consider – there are thousands of seafarers at risk. We are very concerned about their safety.”

“In the past 24 hours, five tankers were attacked, one of which was anchored off Oman, not even in the Gulf of Hormuz, and it was hit with crew casualties. This issue affects real people too,” Nixon said.