'Middle East conflict may affect global shipping'

The Israel-Hamas conflict has not had any immediate effect on global shipping, but it may impact ocean freight if the conflict lingers.

Still, the situation has not reached that level and it cannot be said right now whether there will be any effect on global shipping and freight rates.

If the conflict persists, it may have such an impact, said Syed Mohammad Arif, chairman of Bangladesh Shipping Agents' Association (BSAA), in an interview with The Daily Star yesterday.

Israel's attacks on Gaza, in retaliation to an attack on Israel from Hamas, have killed more than 4,100 Palestinians and injured thousands, largely civilians.

Last week, The Straits Times said there were reports of congestion and a backlog of cargo at the Israeli ports of Haifa and Ashdod, as well as the closure of smaller ports around the coastal Gaza enclave.

Citing shipping and maritime officials, it said the conflict could introduce risks to two vital shipping chokepoints in the Middle East if it spreads beyond Israel and Gaza and turns out to be long and drawn out.

The two chokepoints are the Suez Canal in Egypt, a critical maritime trade route connecting Europe and the Middle East to Asia, and the Strait of Hormuz between Oman and Iran, the only waterway enabling oil to be transported from the Gulf region to the Indian Ocean and beyond, reports The Straits Times.

Any effect on Suez Canal will cause ships to take the longer route around Africa, increasing the cost of shipping from places like Europe to Asia, including Singapore, reports the newspaper, quoting an official.

BSAA Chairman Arif said shipping freight rates have declined globally since the high levels recorded due to pent-up demand after economies reopened following Covid-19. The decline is the result of reduced demand amid slowdown in the global economy.

This is benefiting Bangladesh's exporters and importers as cost of shipment has fallen, he added.

But because of dollar shortage, local factories are not being able to benefit fully as they cannot import required amount of goods to manufacture products.

Many small factories are suffering as they cannot bring raw materials and their problems are unlikely to be resolved as long as the dollar crisis persists, he added.

Arif said prices of imported commodities should have declined in the domestic market as shipping freight rates dropped. "But prices of commodities are not falling," he said.