Dubai: The National Shipping and Logistics Committee confirmed that the UAE has a strong logistics infrastructure and a sophisticated network of roads and ports, which has enabled it to deal with emergency conditions that arose in maritime traffic.
The Committee explained that it is difficult to determine uniform prices for transporting containers in the wake of the problems that affected the Strait of Hormuz, but shipping prices and related costs have increased during the past period by about three to five times - by a percentage ranging between 300 and 500%.
The Committee stressed that the price of shipping the goods itself did not increase in the way that was reported, but rather the additional costs associated with the shipping process increased, pointing to a set of fees and costs resulting from changes in transport routes and operations, including war risk allowance, emergency fees related to the conflict, in addition to an emergency fuel fee that varies from one carrier to another.
It stressed that the return of maritime routes to normal will have a positive impact on shipping traffic and associated costs.
Changing routes
In detail, Ahmed Abdul Razzaq, Vice Chairman of the National Shipping and Logistics Committee and General Manager of Maltrans Emirates Shipping Company, said that it is difficult to set uniform prices for container transport in the wake of the problems that affected the Strait of Hormuz, noting that prices and costs are subject to multiple factors and vary from one shipping line to another, and from one port to another.
Abdul Razzaq explained that the repercussions of the disruptions to the sea lanes have led to a change in the routes of a number of shipments to the Gulf markets, as some containers arrive directly at the ports, while other containers pass through intermediate ports before completing their journey by sea or land.
He pointed out that the UAE has a strong logistical infrastructure and a sophisticated network of roads and ports, which enabled it to deal with the emergency conditions that affected maritime traffic. He noted that shipments destined for various ports, including Khor Fakkan, Fujairah, and ports in the Sultanate of Oman such as Sohar and Salalah, arrived at those ports before some of them were transported overland to the country’s ports, including Jebel Ali.
Shipping prices
Abdul Razzaq explained that shipping rates and related costs have increased three to five times recently, representing a rise of between 300% and 500%. He emphasised that this increase does not necessarily reflect a rise in the basic sea freight rate alone. He stated: "The price of shipping the goods themselves has not increased to the extent that has been reported; rather, it is the additional costs associated with the shipping process that have risen."
He continued: “Land transport prices, for example, have witnessed a significant increase, and the cost of transporting a container is not limited to the sea freight rate, but includes a range of fees and costs that have accumulated as a result of changes in transport routes and operations.”
He pointed out that many shipping lines have activated a clause that allows them to unload cargo at the nearest port when there are problems with the sea routes, which has led to cargoes arriving at different ports. He explained that a number of ships unloaded their cargoes at ports in the Sultanate of Oman, before the containers later arrived in Fujairah and Khor Fakkan, and then were transported to their final destinations.
He added: “These operations resulted in additional fees, including clearance fees, in addition to higher fuel costs. The final cost is not limited to the basic sea freight price, but results from the accumulation of additional fees on the container, including war risk allowance, conflict-related emergency fees, in addition to an emergency fuel surcharge that varies from one carrier to another, due to increased fuel consumption caused by longer routes and transshipment operations.”
Abdul Razzaq confirmed that the price increases are also linked to the decline in available shipping capacity to the Gulf region, explaining that the challenge here is not only related to price levels but also to the availability of space on ships. He stated that some voyages have reached full capacity, while others have been canceled, and transferring bookings to later voyages has become common on some routes.
Abdul Razzaq pointed out that there is a difference in shipping costs to Gulf ports, due to the difference in ports, access routes and the method of transporting containers, which leads to a difference in cost from one case to another.
Abdul Razzaq noted that shipping prices have not yet decreased and are still at peak levels, pointing out that the return of sea routes to their normal state will be reflected in shipping activity and related costs, especially since part of the current increase is related to alternative routes, fees, and additional costs associated with transportation operations.
Essential goods are a priority
Regarding the local market, Abdul Razzaq confirmed that materials are available in the UAE, noting that the country has taken measures that have helped to deal with the circumstances that have arisen in the shipping movement.
He said that essential goods were given priority in customs clearance, which helped ensure their continued availability in the market. Abdul Razzaq emphasised that disruptions to maritime shipping did not limit goods transport to a single route, but rather prompted shipping companies and carriers to utilise multiple alternatives, whether through various Gulf ports, or via medium-range sea and land transport.
He stressed that the nature of the logistics infrastructure in the UAE, along with the network of roads and ports, helped to deal with these changes, and to transport containers that arrived at different ports into the country and complete their journey to their final destinations.