Iran conflict disrupts German trade, sending shipping costs soaring
The ongoing conflict in Iran has disrupted global trade routes, creating fresh challenges for German businesses. Shipping delays, soaring costs, and supply chain disruptions are now affecting industries across the country.
A recent survey reveals that nearly a quarter of companies expect demand to drop in their key export markets. Meanwhile, rising energy prices remain the top concern for most firms.
The closure of the Strait of Hormuz has forced shipping firms to reroute vessels around Africa's Cape of Good Hope instead of using the Suez Canal. This detour has led to longer transport times, higher freight rates, and a shortage of containers. Insurance premiums for German exporters have also surged, adding to financial pressures.
Airlines, including Lufthansa, now avoid the Persian Gulf, taking longer flight paths that raise fuel costs and push up ticket prices. The automotive and machinery sectors report severe supply chain issues, with some companies prioritising critical shipments while absorbing extra expenses. According to the survey, 36% of industrial firms highlight shipping route disruptions as a major problem. Another 36% face shortages of raw materials and intermediate goods, while 16% worry about air freight delays. Only 9% of businesses remain unaffected by the conflict. Beyond logistics, companies are grappling with volatile freight costs, higher energy bills, and an increase in payment defaults. Many fear these financial strains will worsen if the situation escalates.
The conflict's economic impact is already visible, with German industries facing higher costs and operational uncertainties. As shipping and energy expenses climb, businesses must adapt to sustained disruptions—though not all can pass these costs on to customers. The coming months will likely bring further challenges if tensions persist.
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