Middle East crisis raises shipping costs, threatens Nigerian Port Cargo

By: Amarachi Okonkwo

Nigeria’s maritime industry is bracing for higher cargo costs and possible trade disruptions as the ongoing crisis in the Middle East begins to affect global shipping routes and insurance premiums for vessels heading to Nigerian ports.

Industry operators say the conflict is already disrupting global shipping routes and raising operational costs for vessels bringing goods into Nigeria.

Chairman of the Shipping Association of Nigeria (SAN), Boma Alabi, said the crisis has begun to affect the shipping industry and could have a sustained impact on cargo movements and logistics costs.

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According to her, rising security threats around key maritime corridors have forced shipping companies to incur additional expenses.

She explained that insurance premiums and operational costs are increasing due to the closure of the Strait of Hormuz and heightened security concerns around the Red Sea and the Suez Canal.

“It has definitely impacted already and will continue to impact. There are increased costs as insurance and other expenses escalate due to the closure of the Strait of Hormuz and the heightened security issues around the Red Sea and the Suez Canal,” she said.

Alabi added that shipping companies are also spending more on bunker fuel as vessels are forced to take longer routes to reach European destinations.

“Operational costs include more expenses on bunkers because ships have to pass through a longer route to Europe. War Risk Insurance has also been imposed,” she noted.

Also commenting on the development, former Vice President of the Association of Nigerian Licensed Customs Agents, Kayode Farinto, said the situation could significantly raise the cost of cargo coming into Nigeria.

Farinto disclosed that some countries have already begun declaring force majeure in the shipping industry due to the escalating crisis.

He warned that many shipping companies may soon begin charging War Risk Insurance on cargo destined for Nigeria.

“These charges could be as much as $3,000 to $4,000 per container, and you know what that means to an economy like ours,” he said.

A maritime consultant, Daniel Odibe, also warned that shipping companies may redirect vessels to more profitable markets if the crisis drags on.

According to him, shipping lines could prioritise European routes where freight rates are higher instead of African destinations.

“Shipping firms will naturally go to a higher-paying route than the African market if the war persists,” he said.

Odibe added that many shipments to Europe originate from China and do not necessarily need to pass through the Strait of Hormuz, as vessels can take alternative routes through southern Africa and along the West African coast.

Meanwhile, some Nigerian importers said they are reviewing their business strategies amid the uncertainty created by the conflict, citing fears of higher freight costs, delayed cargo deliveries and possible supply disruptions in the coming months.