Iran's seizure of MSC Aries brings uncertainty to Indian container ship market

The seizure of MSC Aries by the Iranian military near the Strait of Hormuz has created uncertainty in the Indian container ship market, with shipowners bracing themselves for potential changes in services and increments in freight rates if the crisis escalates.

The ship was intercepted April 13 in an Iranian military helicopter operation and redirected into Iranian waters.

The Portuguese-flagged MSC Aries is owned by Gortal Shipping Inc and affiliated to Zodiac Maritime. A Zodiac Maritime spokesperson did not elaborate on the nature of Gortal Shipping's affiliation with the company.

The 14,300 twenty-foot equivalent unit ship was part of Mediterranean Shipping Co.’s Himalaya Express service between India and Northern Europe, with weekly calls at Nhava Sheva and Mundra in India, according to the Journal of Commerce, part of S&P Global.

Under these unpredictable circumstances for cargo movement from India towards Middle East and Europe, market participants mentioned that carriers have not been communicative with schedules but have subsequently increased spot container freight rates to Europe.

"Carriers are not disclosing their service routes very transparently," a freight forwarder said. "We are confused as to what to advise our customers. Air freight rates have risen and container spot to Europe is higher by $300 from last week."

Platts assessed PCR 33 -- West Coast India-to-the Middle East -- at $350/FEU, and TCR 33 -- West Coast India-to-the Middle East -- at $250/TEU on April 17 unchanged from the day. Platts is part of S&P Global Commodity Insights.

In the event of any escalation in crisis in the Persian Gulf, shippers might lose access to the Strait of Hormuz, in which case some complications will likely unfold for shipping lanes going forward.

One measure has been rethinking transshipment ports in case UAE and Oman become inaccessible.

"From a container shipping perspective it would be a major problem if the crisis expands to also include the Strait of Hormuz," said Lars Jensen, a Journal of Commerce analyst. "Saudi Arabia would suddenly see its second coast cut off, and it is obviously a choke point to UAE, Qatar, Bahrain, Kuwait and Iraq. Khor Fakkan in the UAE and Sohar in Oman is de facto in the risk area, leaving only Salalah (Oman) outside the risk area."

Red Sea crisis

After the onset of the Red Sea crisis, in which Yemen's Houthi rebels have been attacking ships in retaliation, they say, for Israel's war in Gaza, the UAE's Jebel Ali, a major transshipment hub for westbound cargo and an intermodal transport between Asia, Europe and the US, has seen an increase in shipments and congestion. Saudi Arabian ports such as Jubail and Dammam are also congested, forcing shippers to opt for further Saudi ports like Jeddah. Salalah on the other hand is a Maersk hub and used infrequently by other carriers apart from the Maersk-MSC, or 2M, led services.

"Shipping lines are struggling with space in the Middle East, since Dammam and Jubail are congested, they are asking to move cargo from Jeddah," a shipper said.

Shippers say they are also weighing whether to use Columbo as a transshipment port, especially from the Indian Subcontinent.

"Even though on the map it looks like Salalah would be a good idea and cut off from the rest of the crisis, we do not think that would be the case," a source said. "Hence the next best solution is Colombo."

Colombo and Mundra serve as an important hub for MSC. Additionally, Columbo is also an important bunkering hub, ever since transit times have increased due to the Cape of Good Hope reroutings.

An S&P Global Bunkerworld survey showed bunker sales volume at Colombo surged by 33% to 40,000 mt/month after the Red Sea disruptions, up from an average of 30,000 mt/month before.