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How the Iran Conflict Could Affect a Business in the Transport Industry

Written by IntaCapital Swiss on March 10, 2026. Posted in Iran, News & Reports. Leave a Comment

The ongoing conflict involving Iran and regional powers has rapidly shifted from a geopolitical flashpoint to a global economic stress test — with profound implications for businesses in the transport industry. From disrupted trade lanes to spiking fuel costs and shifting demand patterns, transport companies must adjust to current market volatility and structural shifts in how goods and people move internationally.

Recent events — including military strikes on Iranian territory and Iran’s closing of the Strait of Hormuz — have combined to create both immediate disruptions and longer-term risks for transport operators, logistics planners, and global supply chains. This article examines those impacts in depth, focusing on maritime shipping, air cargo, land transport supply chains, insurance markets, and strategic responses for transport businesses.

Strategic Chokepoints and Route Disruption: The Strait of Hormuz

One of the most direct ways the Iran conflict affects transport industries is through disruption of critical maritime routes.

The Strait of Hormuz — a narrow waterway at the entrance to the Persian Gulf — is a linchpin of global energy and freight flows. Traditionally, about 20% to 30% of the world’s total daily petroleum liquids (oil, condensate and products) and circa 20% of global LNG (liquified Natural Gas) pass through this channel, and it also underpins a significant portion of container and bulk ship traffic. Data shows that just oil flow alone accounts for circa 20% of global oil (often exceeding 20 Million bpd) is shipped through the strait.

With Iran effectively blocking or threatening to block passage through the strait in response to escalating military hostilities, vessel traffic has been severely curtailed. Recent reports confirm that shipping traffic has “halted or been diverted” as insurers drop war-risk cover and carriers avoid the region. However, President Trump has announced that the US Forces stationed in the area may provide an escort to tankers passing through the strait.

For transport companies, especially those that operate container ships, bulk carriers, and tankers, this means:

Longer routes: Ships are rerouting around Africa via the Cape of Good Hope rather than traversing the shorter Suez Canal ↔ Hormuz route. This adds days or even weeks to voyages.
Increased fuel consumption: Longer sailings mean higher bunkering costs, reducing margins.
Scheduling chaos: Regular service loops and timetables are disrupted, affecting feeder services and inland distribution.

Even if traffic eventually resumes, the uncertainty and risk premium attached to Gulf passage will linger, discouraging carriers until the geopolitical landscape stabilises.

Rising Fuel and Freight Costs

Fuel is among the largest operating costs for transport businesses — especially shipping, aviation, and road freight. The Iran conflict, by escalating risk around oil supplies and increasing premiums for war-risk cover, has pushed prices higher across the board.

Key consequences include:

Spiking bunker fuel prices: As oil markets react to Middle East instability, bunker fuel costs surge, squeezing profit margins for shipping lines and logistics firms.
Freight rate inflation: Both ocean and air freight indexes have ticked up sharply as capacity shrinks and carriers pass costs on.
Higher ancillary charges: Some carriers are introducing conflict-related surcharges, particularly on routes that cross the Gulf or Red Sea.

For many transport businesses, these rising costs could force pricing adjustments, change in service offerings, or even strategic withdrawal from riskier routes.

Air Transport Disruption and Rising Insurance Costs

The conflict has not only affected maritime transport. Air cargo networks flying over or near the Middle East have been disrupted as airlines re-route to avoid dangerous airspace.

This has led to:

Longer air routes and greater fuel burn.
Reduced cargo capacity because fewer flights or aircraft are willing to traverse high-risk corridors — a trend that pushes freight rates higher.
Increased insurance premiums: Aviation insurers have also adjusted risk pricing for operations in proximity to conflict zones.

For smaller express and parcel carriers relying on global hubs in the Gulf, Middle East instability could reduce service frequency and reliability — impacting both delivery promises and customer trust.

Logistics Cascades: Delays, Capacity Shifts, and Supply Chain Spillovers

Transport businesses don’t operate in isolation. Disruption in one link of a supply chain — like ocean transit times — can cascade throughout the network.

Recent industry warnings indicate:

Delays at ports and inland hubs as goods stack up and carriers adjust bookings.
Modal shifts: Some shippers are shifting from sea to air freight to maintain delivery schedules, but air capacity constraints and high rates may soon push them back or force hybrid strategies.
Equipment shortages in key regions as containers and chassis get stuck far from origin markets.

These kinds of disruptions are especially taxing for just-in-time logistics systems, which lack inventory buffers and depend on predictable transit windows.

Insurance Markets: War Risk Cover Withdrawal

A direct consequence of elevated geopolitical risk is the withdrawal of war-risk insurance cover in affected waters. Major maritime insurers — including big European mutuals and UK firms — have ceased providing cover for tankers and cargo vessels operating in the Persian Gulf.

What this means for transport businesses:

Higher risk premiums: Operators now have to find alternative coverage at significantly increased cost or self-insure if they have the balance sheet.
Exclusion zones: Some insurers may exclude operations within specified nautical miles of conflict zones.
Risk pricing impacts: War risk pricing feeds into total freight cost — potentially eroding competitiveness.

In effect, the transport industry is being forced to internalise risks it previously externalised via insurance markets.

Business Travel and Passenger Transport

Tourism, business travel, and passenger logistics are also impacted. Rising oil costs translate into higher jet fuel costs (a large portion of airline expenses), which hit both ticket pricing and passenger volumes.

China, the Gulf states, and Europe all depend on Middle Eastern hubs for transit and business connections. Instability may reduce travel demand in and through these nodes, directly affecting:

Airlines and airports reliant on transit traffic.
Tour operators and booking agents servicing intercontinental routes.
Taxi, coach, and rail networks that feed into unstable international gateway cities.

Passenger transport isn’t as directly hit as freight, but sustained regional instability could remodel global travel flows over the long run.

Strategic and Long-Term Risks

Beyond immediate cost and operational disruptions, longer-term strategic risks for transport businesses include:

Shifts in global trade patterns: Companies may seek alternatives to conflict-affected routes, potentially boosting Eurasian rail corridors or bypass corridors through Africa.
Investment reallocation: Firms might prioritise infrastructure and assets in lower-risk geographies.
Technological acceleration: Investment in digital logistics, route optimisation, and predictive analytics to hedge risk and improve resilience.
Regulatory fragmentation: Sanctions or trade restrictions tied to the conflict could further restrict transport flows or require compliance changes.

In short, transport companies must think not just about today’s route but tomorrow’s geography of commerce.

What Transport Businesses Can Do

While the outlook is challenging, proactive firms are already adapting:

1. Risk-aware routing: Using real-time conflict intelligence to avoid hotspots and adjust schedules dynamically.

2. Diversified port and hub use: Reducing exposure to any one chokepoint by expanding node flexibility.

3. Fuel hedging strategies: Locking in fuel costs through hedges to manage volatility.

4. Insurance risk pooling: Exploring group coverage or self-insurance strategies to control rising premiums.

These strategic moves won’t eliminate risk, but they can blunt the economic impact and position companies to thrive in an uncertain landscape.

The Iran conflict has swiftly evolved from a regional geopolitical issue into a global economic event with wide-ranging consequences for the transport industry. With strategic chokepoints disrupted, fuel and freight costs rising, insurance markets recalibrating, and supply chain cascades unfolding, transport businesses face both immediate pressures and enduring strategic challenges.

Ultimately, the companies that adapt — by rethinking routes, rebalancing risk, and embracing flexibility — will be best positioned to navigate this period of disruption. The Iran conflict is a stark reminder that geopolitical instability can quickly transform the logistical landscape, and resilience must be central to any transport business strategy.

Is it Time for the USD25 Trillion Global Cargo Trade to go Digital?

Written by IntaCapital Swiss on November 16, 2023. Posted in Industry, News & Reports. Leave a Comment

Paper documents still rule the world in global cargo trade. Indeed within this USD25 Trillion business, there is, at any one time, four billion paper documents in circulation. Importers, exporters, banks, brokers, financiers et al all rely on paper documents, which finance and move global resources around the world. It is a system that has seen little change since the 19th century and yet paper documents are frequently subject to fraud (i.e., fake or altered), get lost, and can with any particular journey add huge amounts of time.

With regards to time, data released by experts within this area suggest that the time to process a single bill of lading (paper document along with others) required for the transportation of goods, from issuance to customs clearance which for example includes preparation, issuance, shipper to bank, shipper bank to buyer bank, buyer bank to buyer, submission for customs clearance is circa 16.4 hours. Digitisation will dramatically reduce the time spent on processing.

Company lawyers are still today flying many miles to get a bill of exchange signed off at the last minute. This happened in Singapore in the late 2000’s where a lawyer flew to Hong Kong from Singapore and back in one day, (circa 5,000 miles) in order to have a bill of lading signed off by a client. Typically, this process does not happen every day but digitisation would reduce this process to minutes.

Below are examples of the main type of paper documents usually required under a documentary letter of credit that underpin global trade.

· Bill of Exchange or Draft

· Airway Bill (if air freight)

· Road Transportation Document (if road freight)

· Bill of lading

· Pro Forma or Commercial Invoice

· Insurance Policy and Certificate

· Certificate of Origin

· Inspection Certificate

· Packing List

· Warehouse Receipt – when kept in safe custody after goods arrive.

Based in Paris the ICC (International Chamber of Commerce) currently estimates that circa 1% of transactions within the global trade financing market are fraudulent equating to roughly USD50 Billion per annum. The principals involved, such as traders, banks, other financiers and parties, have, according to recently released data, lost USD9 Billion in falsified documentation over the last ten years. Experts are saying that sending duplicate documents to banks involved in a transaction or falsifying documents are the easiest types of fraud to commit.

Examples of fraud can be seen in the metals market which, going back in history and up to today, has been beset by fraudulent scandals. Some of the latest incidents have encompassed some of the world’s leading trading companies and houses including warehouses connected to the London Metal Exchange (the world’s benchmark futures market for base metals) which were proven to have shortcomings. In the world of metals, the commodity or collateral is usually underpinned by the likes of shipping documents (e.g., quantity ownership, location of goods and quality) and warehouse receipts. Such documents are open to fraudulent misrepresentation, such as being fake whereby the material maybe fictitious, or a single cargo may be pledged for multiple loans which is referred to as over-pledging.

In February of this year a well-known company within the metals industry was left facing a loss of circa USD500,000 as the nickel they had purchased did not contain the nickel as specified in documents. Their modus operandi with nickel was to purchase a cargo of nickel aboard ships then on sell that cargo when the ship reached its destination port. However, on one occasion when investigators in Rotterdam checked the contents of a container containing nickel, they found the contents to be of much lower value materials.

In 2020 a well-known energy group purchased copper from a Turkish supplier, but despite documents confirming the cargo was copper, when the containers were opened, they were full of painted rocks. The list of frauds perpetrated within the metals market is very long indeed, and of course fraud is not just found within metals but anywhere that has paper documentation. It would appear therefore that in order to reduce fraud across the industry, digitisation is the only way forward.

Many advocates of digitisation suggest now is the time to go digital, and make use of blockchain technology. In fact, they go on to say that such technology exists today, resulting in a massive decrease in fraudulent transactions. Furthermore, experts advise that that digitisation will be a boost for the sector, as digitised or electronic bills of lading would increase global trade volume by circa USD40 Billion due to a reduction in trade friction (the reduction in time and paperwork) especially in emerging markets. A very important point as muted by experts suggest from an ecological standpoint that by reducing friction in the container trade (e.g., paper documents), 28,000 tress per year could be saved.

An example of less friction has recently been seen between BHP Group in Australia who shipped nickel in containers to Chinese buyer Jinchuan. The transaction was financed by banks domiciled in each country, and using the ICE Digital Trade Platform the full documentation process amazingly took under 48 hours. Interestingly, 65,000 companies (including leading commodity producers) use the ICE Digital Trade Platform, which provides paperless global management solutions, which include digitisation, automation, and accelerates trade and post-trade operations, finance, logistics, compliance and visibility. Whilst 65,000 companies may sound a lot, remember there are still over four billion bits of paper underpinning global trade in circulation at this very moment.

Detractors say that online hacking is an obstacle to digitisation, but the plain fact is that hacking is a lot more difficult than altering a piece of paper. Indeed, expert opinion advises that that circa USD6 Billion could be saved in direct costs by the major shipping lines if they decided on full adoption of digital bills of lading. Furthermore, it is suggested that financiers such as banks would be more willing to finance those counterparts who are considered to be smaller and riskier if the sector went digital.

Currently, the industry is only transacting 2% of global trade via digitisation. However, change is in the air as ten of the world’s top container shipping lines (nine of which are responsible for in excess of 70% of global container freight), have by 2030, committed to digitalising 100% of their bills of lading, (50% by 2028). Happily, some of the worlds largest and most renowned mining companies have given their vocal support to digitisation, these include Anglo America PLC, Vale SA, Rio Tinto Group and BHP Group Ltd, who are all looking to digitise the bulk shipping industry.

So why is that with all the support for digitisation within the industry, only 2% of global trade has been digitised. The answer is a simple one, as the greatest stumbling block to digitisation is Legal. Whilst shipping companies, insurers, traders, banks and other financiers have all got the wherewithal to go digital, at present the only document recognised by English Law that gives the holder title and ownership to a particular cargo is a paper bill of lading. As a result, any deal or transaction which is not legally secured will not receive funding from a bank or cover from an insurance company, and without either of these two participants there will be no transactions.

As a result of this impasse, on the 20th of July 2023 the Electronic Trade Documents Act 2023, having received royal assent, came into effect on the 30th of September 2023*. This act gives the same legal powers to digital documents as paper ones. This represents a massive step forward, as English Law has legally controlled this industry sector for centuries and underpins circa 90% of global commodities and other trade contracts. France is expected to enact similar legislation towards the end of 2023 whilst Singapore (also a centre for maritime law), passed a similar Act or legal framework in 2021 and in 2022 conducted its first electronic bill of lading transaction.

This act is also based on a Model Law** as adopted by the United Nations, as being a transnational body, it is important that they pass statutes that are acceptable to all countries throughout the world. It has been welcomed by many companies throughout the industry and the Trafigura Group has gone on record by saying “We believe this is one of the solutions which would help in reducing documentary fraud”.

*Electronic Trade Documents Act 2023 – The UK Law Commission published their draft bill in March 2022, which this act is largely based on, and it set out the basis of how, under English law trade, documents can 1. Be dealt with and 2. Exist in electronic form, such that an electronic trade document can have the same effect as a paper trade document. The Act goes on to state that a person may possess, indorse and part with possession of an electronic trade document, and anything done in relation to an electronic trade document has the same effect in relation to the document as it would have in relation to an equivalent paper document. This Act amends the Carriage of Goods by Sea Act 1992 and the Bills of Exchange Act 1882.

**Model Law – UNCITRAL (The United Nations Commission on International Trade law) Model Law on Electronic Transferable Records 2017, aims to enable the legal use of electronic transferable records both domestically and across borders. It applies to electronic transferable records that are functionally equivalent to transferrable documents or instruments. Transferable documents or instruments are paper-based documents or instruments that entitle the holder to claim the performance of the obligation indicated therein and allows the transfer of the claim to that performance by transferring possession of the document or instrument. Transferable documents or instruments typically include bills of lading, promissory notes, warehouse receipts and bills of exchange.

The challenge facing the industry is change. People and companies get stuck in their ways and sometimes it is hard to adopt new processes when the current ones have been in existence for hundreds of years. There are many faults with paper, but it is something that everyone across the ecosystem understands, and whilst there is a global approval of digitisation, few are ready or even keen to be the first to dip their toes in the new waters. Experts have rightly expounded on the fact that if digitisation is to work, then everyone across the supply chain must adopt the same data standards, so that communication can move in the most effective way ensuring verification in a truly interoperable manner.

Tag: Transport