With no immediate end in sight to the war between the U.S./Israel coalition and Iran, the conflict dominates headlines and continues to impact the global economy, from soaring fuel prices to clogged supply chains as the flow of goods is disrupted. Regulatory changes are also having an effect, especially stricter regulations governing CDL licenses for non-English speakers and non-domiciled drivers.
Container Traffic Finding Alternative Middle East Routes as War Rages On
As the Iran war impacts container traffic in the Middle East, major carriers CMA CGM and Maersk have been diverting cargo traffic to safer alternative ports in Oman, UAE, and Saudi Arabia, with containers moving on from there by landbridge, Freightos told Supply Chain Brain.
Container and tanker ships from Iran and some countries not identified with the U.S. or Israel have been able to transit the critical strait since the Iran war began on February 28, while others remain blockaded. European countries have not responded to President Trump’s call to aid in protecting passage in the strait with their naval fleets. And carriers weren’t exactly flocking to Trump’s promise of cheap, universal maritime insurance in the troubled region.
Eighty-nine ships crossed the strait between March 1 and 15, according to Lloyd’s List Intelligence, down from 100-135 daily before the war. Iran, meanwhile, has been able to export oil at a slightly reduced rate.
Another aspect of the war’s impact on ocean freight, according to Freightos, could be container backup in India and ports in the Far East due to canceled sailing to the Gulf region.
The shipping disruption hadn’t impacted transpacific freight volumes at the Port of Los Angeles as of March 18, according to the port’s director in Supply Chain Dive. Retail shipments for the spring fashion season have been flowing in as usual, Gene Seroka said. Still, the conflict has been having a braking effect on carrier-shipper contract negotiations on transpacific lanes as carriers assess impacts on cost and capacity.
Fuel Prices Will Have Impact on Trucking Capacity
With diesel exceeding $5 a gallon for the first time since 2022 due to the impact of the Iran war – and topping $6 per gallon in California – trucking carriers are getting squeezed hard, especially small and midsized firms already operating on thin margins.
The impact of higher diesel prices on profits is leading some smaller carriers to adjust by driving fewer miles or rejecting some loads to save on fuel costs, and/or pumping up fuel surcharges. The longer-term impact could mean fewer trucks on the road and a capacity crunch. The American Trucking Associations is looking at this as a positive: a supply-side recovery for remaining carriers.
Lynn Gravley, incoming vice chairman at the Transportation Intermediaries Association (TIA), said trucking capacity in the U.S. is already extremely fragmented, with 90% of it coming from carriers with six or fewer trucks. These operators are also the most exposed to sudden operating cost shocks, especially fuel, he said. It creates an immediate cash flow crisis for them, and there isn’t much of a buffer when fuel has to be paid for now before freight revenue is collected later.
On top of this, carriers large and small are facing pressure from a federal crackdown on non-English-speaking and non-domiciled CDL holders as well as rising insurance rates, Gravley said.
“If more carriers are taken out of the market, there are simply fewer trucks available to move the same amount of freight,” Gravley said. “From that point of view, fuel is one of the main triggers that turns a stressed market into a capacity crunch. That is when shippers start to care, because the problem finally shows up in the rate they pay. Rates could easily double from what they were prior to the war.”
Gravley said spiking fuel prices have to be seen in the broader context of the fragmented trucking ecosystem with thin margins, weak cash flow, “and a market where even a short-term spike in fuel can ripple quickly into higher prices for shippers and, ultimately, consumers.”
Air Cargo Capacity Rebounds After Steep Drop; Rates Soar
Global air cargo capacity, which had fallen by 20% in the first week after the Iran war started compared to pre-Chinese New Year, recovered to an 11% decline for the week ended March 20, according to consultancy Rotate. Traffic from Asia and Europe to the Middle East were the most affected, with APAC capacity to the region down 39% as of March 19, per Rotate.
Air freight rates were up as much as 70% on some routes since the conflict began, according to Reuters. In other air cargo news, the Airforwarders Association is warning that the ongoing DHS shutdown is threatening air cargo operations and the overall supply chain, as TSA faces staff shortages amid growing resignations.
Dalilah’s Law Goes to Full House for Consideration
Dalilah’s Law, named for a young girl injured by a truck operated by an undocumented immigrant, passed through the House Committee on Transportation and Infrastructure on March 17. It now goes to the full House for consideration. It was sponsored by Rep. David Rouzer, R-N.C., who chairs the committee, and championed by President Trump in his State of the Union address.
Among other things, the law would prohibit non-English speakers from holding a CDL, limit non-domiciled CDLs to citizens or green card holders, and allow the federal government to withhold funds from states that do not comply with the law. The companion bill was introduced in the Senate last month by Sen. Jim Banks, R-Ind.
The law goes further than the new final rule from the Federal Motor Carrier Safety Administration (FMCSA), which went into effect on March 16. That rule put an immediate pause on issuance of non-domiciled commercial driver’s licenses (CLPs) or CDLs until states can “ensure non-domiciled CLPs and CDLs are issued in accordance with the revised standards.”
LTL Volume Performance Weak in February
Three major LTL carriers reported a mixed bag of February performance figures, with tons per day down or flat, shipments per day down, or up slightly but offset by lower average weight per shipment, reflecting the challenging business climate.
Old Dominion Freight Line said tons per day were down 6.8% and shipments per day down 7.7% in February compared to a year ago, causing a 3.3% drop in revenue per day, offset by an unspecified in revenue per hundredweight.
Competitor Saia saw its shipments per day increase 0.3% in February, but tonnage per day (-2.7%) and weight per shipment (-3%) were both in decline. All those metrics were down year over year in January.
XPO reported tonnage per day was up 0.2% in February, tied to a 3% increase in shipments per day and a decrease of 2.8% in weight per shipment.
ABF Freight, the LTL division of carrier ArcBest, took a different tack, showing sequential gains in February versus January in shipments and tonnage per day (+1%) and revenue per shipment (+2). It did not release year-over-year metrics for February.
Lean on Reliable Partner in Turbulent Times
Nearly a month into the Iran war, there’s not a lot of clarity from Washington or Tel Aviv as to when it will be concluded. In the meantime, fuel prices are making life difficult for everyone from consumers to businesses to carriers, and belt tightening is the order of the day.
For shippers looking to find ways to lessen the impact of increased transportation costs, an experienced logistics provider can be an invaluable help. They can help you identify mode shifts, consolidate freight, optimize routing and loading patterns, and tighten operational readiness so every load generates as much value as possible.
Wicker Park Logistics, a woman-owned logistics company and WBENC Certified Business, provides dependable transportation services across industries. We leverage deep sector expertise, a cloud-based platform, and a consultative approach to help you match the most efficient transportation options to your budget and service-level requirements.
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