The deadlock between the United States and Iran continues to escalate, putting cross-border logistics for large-scale engineering equipment under heavy pressure and hindering its progress

US Iran standoff reshapes Middle East shipping pattern

At present, the United States is caught in a triple dilemma of military, economic, and diplomatic issues regarding the Iran issue. The five month conflict has failed to achieve strategic goals and instead formed an unsolvable game deadlock. The intermittent air strikes by the United States and Iran's tough countermeasures have formed a confrontational situation, coupled with domestic political pressure from the midterm elections, making the long-term tense and fluctuating situation between the United States and Iran a norm. As a core global shipping route, the Strait of Hormuz carries a large number of cross-border trade and freight channels. The turbulent situation directly breaks the stable state of shipping in the Middle East, and the risk of merchant ships passing through has increased sharply, with disrupted route operations, laying multiple hidden dangers for cross-border logistics of large-scale engineering equipment worldwide. Large infrastructure equipment such as rotary drilling rigs and pile drivers belong to the category of oversized and overweight special goods, which rely on fixed ocean going heavy lift ships and roll on/roll off ships for transportation. They have extremely high requirements for waterway safety, route efficiency, and logistics stability. The changes in the Middle East shipping pattern have a much greater impact on their transportation links than ordinary goods.

Restricted passage of waterways leads to equipment transportation stagnation and pressure

After the ongoing escalation of the US Iran conflict, military risks in the waters of the Strait of Hormuz have intensified, and the threat of drone and missile attacks has become normalized. Most shipping companies have voluntarily suspended large cargo orders on core Middle Eastern routes, reduced their regular transportation schedules, and avoided maritime security risks. In the past, high-quality air routes that relied on the Persian Gulf and the Strait of Hormuz to directly reach Eurasia and Africa were forced to stagnate, and a large number of rotary drilling rigs and pile drivers waiting for export and transit were stranded at domestic and foreign ports, unable to be shipped on schedule. These types of large equipment are bulky, indivisible, and have special storage conditions. Long term port detention not only occupies a large number of storage berths, but also easily leads to equipment corrosion, component loss, and other problems, increasing additional maintenance costs. At the same time, the import and export business of ports in many countries along the Middle East coast has almost come to a standstill, and the transfer and transshipment process of large equipment has been interrupted. The cross-border transportation chain has experienced phased ruptures, seriously affecting the equipment supply rhythm of overseas infrastructure projects.

The route detour significantly prolongs the transportation cycle

To avoid risks in the Strait of Hormuz and the Red Sea, the vast majority of ocean going vessels carrying large engineering equipment are forced to abandon the Suez Canal route and detour around the Cape of Good Hope in Africa to complete cross-border transportation between Europe and Asia. The adjustment of the route has directly led to a significant increase in transportation mileage and duration. Compared to the original route, the one-way distance has increased by nearly 10000 nautical miles, and the transportation time has increased by more than 30 days. For overseas infrastructure projects with tight schedules, the delayed arrival of rotary drilling rigs and pile drivers at the port will directly lead to delays in core processes such as site leveling and pile foundation construction, causing chain problems such as project delays, idle labor, and breach of contract compensation. Moreover, the volatile situation between the United States and Iran, with constantly changing air route policies, makes it difficult for logistics companies to develop stable transportation plans. Equipment shipments and arrival times are difficult to predict, further exacerbating the uncertainty of cross-border logistics.

The superposition of multiple costs increases the logistics cost of equipment

The energy fluctuations and shipping risks caused by the US Iran stalemate have led to a comprehensive increase in logistics costs for large equipment. On the one hand, conflicts have led to a sustained surge in global oil prices, with low crude oil inventories exacerbating energy price fluctuations and causing a significant increase in fuel costs for ocean going vessels. On the other hand, large heavy lift and roll on/roll off ships consume a large amount of fuel, directly resulting in a significant increase in equipment transportation costs. On the other hand, the insurance premiums for high-risk shipping in the Middle East have skyrocketed, and the war risk rates have been significantly increased. Coupled with the cost of manpower and ship losses caused by route detours, the additional expenses for cross-border transportation of large equipment per trip have increased significantly. In addition, the continuous accumulation of derivative costs such as port detention maintenance, temporary storage, and route changes ultimately leads to a significant increase in the overall cross-border logistics cost of equipment such as rotary drilling rigs and pile drivers, compressing the profit margin of infrastructure enterprises' overseas projects.

The contraction of transportation capacity exacerbates the imbalance between equipment logistics supply and demand

The transportation of large-scale engineering equipment is highly dependent on specialized transportation capacity, and global resources for heavy lift ships and special roll on/roll off ships are already scarce and concentrated. After the turbulent situation between the United States and Iran, shipping companies have significantly tightened the allocation of special vessel capacity due to risk control considerations, prioritizing the transportation of energy and essential materials, and reducing the quota for the transportation of large engineering equipment. At the same time, some ships have temporarily adjusted their routes and suspended accepting orders, resulting in a continuous contraction of cross-border special transport supply. The current global infrastructure market is steadily recovering, with strong demand for cross-border transportation of equipment such as rotary drilling rigs and pile drivers. The contrast between reduced transportation capacity and stable demand has directly caused an imbalance in logistics supply and demand, increasing the difficulty of equipment booking and extending booking cycles. Some emergency projects even face the dilemma of having no ships to book, seriously restricting the efficient operation of the cross-border infrastructure industry.

Long term confrontation forces the transformation of logistics transportation mode

CNN predicts that there is currently no effective solution to the US Iran standoff, and the deadlock will continue for a long time, which means that the high-risk, high cost, and low timeliness state of Middle Eastern shipping will become the norm. The traditional on-time and low-cost cross-border logistics model relying on the core shipping routes in the Middle East is no longer applicable, and the industry is gradually transitioning towards a stable model of multiple route options, advance stocking, and staggered transportation. Logistics companies are starting to optimize the transportation plan for large equipment, planning detour routes in advance, locking in long-term transportation capacity, purchasing sufficient insurance, and avoiding the risk of situation fluctuations. Infrastructure companies are gradually adjusting their procurement and construction plans, stocking up on rotary drilling rigs and pile drivers required for overseas projects in advance, hedging logistics delay risks through pre stocking, and adapting to the new global logistics landscape in turbulent situations.