COSCO Ships Turn Back From Strait of Hormuz on March 27
On March 27, two COSCO Shipping Lines container vessels, the 'COSCO Shipping Arctic Ocean' and 'COSCO Shipping Indian Ocean', reversed course away from the Strait of Hormuz. Ship tracking data confirmed the vessels turned back towards the Persian Gulf, aborting their transit through the world's most critical oil chokepoint. This maneuver is a direct reflection of the untenable security situation and the operational decisions carriers are forced to make. The diversion highlights the severe risk perception that has effectively shuttered the waterway for most commercial traffic, prompting shippers to seek any alternative to the high-stakes passage.
Hormuz Traffic Plunges 90% as Iran Controls Access
The rerouting by COSCO comes as traffic through the Strait of Hormuz has virtually ground to a halt. Vessel transits have fallen by 90% from a pre-conflict average of 138 ships per day to just 150 ships in the entire month of March. Iran's Islamic Revolutionary Guard Corps (IRGC) has established what analysts call a "toll booth" regime, forcing vessels into a new corridor through Iranian territorial waters for vetting. Reports indicate that at least two vessels have paid for safe passage, with one payment for a Very Large Crude Carrier (VLCC) reaching as high as $2 million, settled in Chinese yuan. This system formalizes Iran's control over the strait, creating a new layer of cost and geopolitical risk for global trade.
Shipping Lines Adopt Costly Overland Workarounds
In response to the blockade, major ocean carriers are developing complex multimodal solutions to bypass Hormuz entirely. COSCO recently resumed accepting cargo bookings for Gulf destinations, not through the strait, but via a "land bridge" service. This strategy involves offloading containers at ports outside the conflict zone, such as Khor Fakkan or Fujairah in the UAE, and then transporting the goods overland to their final destinations in Saudi Arabia, Qatar, and Iraq. While this workaround allows some essential goods, including food, to enter the region, it introduces significant logistical costs and delivery delays, reshaping supply chain dynamics for the foreseeable future.
