Hormuz closure pushes shipping company’s expenses near $600 million

One of the world’s leading container shipping companies, Hapag-Lloyd, said that the closure of the Strait of Hormuz due to the conflict in the Middle East pushed the company’s expenses to nearly $600 million in the second quarter, AzerNEWS reports, citing Al Jazeera.

The shipping giant said its net profit fell to $83 million, down from $306 million in the same period last year. The company added that strong exports from Asia and improving demand in the United States partially offset the losses caused by the situation in the Middle East.

Operating profit in the company’s Liner Shipping segment declined from $167 million to $153 million. This was attributed to additional costs for fuel, insurance, storage, rerouting and inland transportation following the closure of the strait.

Hapag-Lloyd said its outlook, which the company ?raised ?in July, remains subject to ?considerable uncertainty due to the highly volatile freight rates.

The Strait of Hormuz is a narrow maritime passage between the Persian Gulf and the Gulf of Oman, holding significant strategic importance as approximately 20% of global oil supplies and around 25% of liquefied natural gas (LNG) exports pass through it. Essentially, it serves as an energy artery for countries in Asia, Europe, and even the United States.

The strait separates Iran from Oman, and in some areas, the width of the shipping channel is only two miles on each side. Given its critical role in global energy supply chains, ensuring the safety and security of this vital waterway is paramount for international trade and economic stability.