THE SEIZURE of MSC Aries has prompted warning that war risk premiums are set to increase, leading to heightened volatility in shipping markets.
Iranian forces seized the Portuguese-flagged containership, chartered to MSC, on Saturday 13 April, citing links to Israel and violation of maritime laws.
The ship was in the Strait of Hormuz when it was captured – about 50 nautical miles northeast of Fujairah, UAE.
“The vessel was diverted into Iran’s territorial waters as a result of violating maritime laws and not answering calls made by Iranian authorities,” Iran’s Foreign Ministry spokesperson Nasser Kanaani said, according to Reuters.
Ocean freight analysts at Xeneta believe the capture of MSC Aries could put ocean freight container imports and oil exports in the Middle East at risk.
The capture follows months of attacks against commercial shipping in the Red Sea and Gulf of Aden, carried out by Ansar Allah – also known as the Houthis – who are connected to Iran.
“We don’t yet know the full details of the incident in the Strait of Hormuz, but any widening of the conflict which has already resulted in huge disruption to ocean freight services in the Red Sea region would be extremely concerning,” Xeneta chief analyst Peter Sand said on 13 April.
“For example, Dubai is a regional hub for imports as well as sea-air corridors, with containers arriving by ocean via the Strait of Hormuz for onward travel by air to Europe and North America,” he said.
“If ships are impacted from sailing into the Arabian Gulf [sic], then the disruption would be considerable.”
Online container trading platform Container xChange said the capture has fuelled concerns about the security of key trade routes and the stability of regional hubs such as Jebel Ali, in Dubai.
“Regardless of immediate outcomes, we anticipate heightened uncertainty in shipping markets,” Container xChange CEO Christian Roeloffs said.
“This comes at a time when tensions have already been simmering since the end of November, particularly in the Bab-al-Mandab strait and the Red Sea.”
Mr Roeloffs said the emergence of the Strait of Hormuz as a new focal point would have “significant implications” for Dubai, specifically Jebel Ali, which is a core transhipment hub in the region.
“The Strait of Hormuz’s strategic importance, coupled with its role as a key transit point for maritime traffic, emphasises the significance of this latest escalation,” he said.
“Furthermore, the implications extend to major transhipment hubs like Jebel Ali in Dubai, amplifying the potential impact on regional trade and shipping operations.”
Container xChange anticipates an increase in war risk premiums, and that freight rates may rise in response to increased tension and uncertainty.
Mr Roeloffs said there is a possibility of diversions around the region, but he considers it unlikely because of Jebel Ali’s importance in global shipping networks.
“Recent incidents, including Iran’s seizure of vessels in the past, highlight the region’s geopolitical complexities,” he said.
“This latest escalation, in response to an attack on the Iranian embassy in Damascus, further emphasises the fragility of regional stability and its potential impact on the global economy.
“As tensions continue to escalate, the question of what comes next looms large. The potential spread of conflict from the Red Sea into the Strait of Hormuz raises concerns about the broader regional and global implications of this localised conflict.”
The International Chamber of Shipping as condemned the seizure of MSC Aries as “a direct contravention of international law” and “an assault on the fundamental principle of freedom of navigation”.
It called for the immediate release of the ship and the seafarers held hostage, adding that the wellbeing of the crew is the highest priority.
“Iran’s seizure of the MSC Aries is a flagrant breach of international law and an assault on freedom of navigation,” ICS secretary general Guy Platten said.
“This reprehensible attack against a merchant ship once again places innocent seafarers on the front lines of geopolitical conflict.
“Our thoughts are with the 25 seafarers who are now captives of Iran, and with the families who are now in fear of their loved ones’ safety. Iran must release the ship as a matter of urgency.”
MSC, in a statement quoted by Reuters, said it was working “with the relevant authorities” for the safe return of Aries and the wellbeing of its 25 crew.
ICS advised ships transiting the region to conduct a thorough threat assessment and liaise closely with military forces to ensure they are fully protected against further possible aggression by Iranian forces.
