Cape Town sea traffic rises as shipping firms avoid Strait of Hormuz and Suez Canal

Rising tensions around Iran are already reshaping global shipping routes, with more vessels bypassing the Middle East and travelling around South Africa.

Maritime security experts say major shipping companies are increasingly avoiding high-risk areas such as the Strait of Hormuz and the Suez Canal, opting instead for the longer Cape route.

Senior maritime security researcher Timothy Walker said some of the world’s largest container shipping companies, including Maersk, CMA CGM and Hapag-Lloyd, are no longer operating through key Middle East choke points.

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This shift is driving a noticeable increase in container ship traffic around the Cape.

“These are very valuable ships,” Walker said, noting that the cost of insuring them has surged due to heightened risk.

Cost calculations favour the longer route

Although sailing around Africa increases fuel consumption and travel time, shipping companies are weighing that against rising insurance premiums and Suez Canal tolls.

Insurance costs, typically a fraction of a ship’s value, can rise sharply during conflict.

With some vessels valued at more than $100 million, companies could face millions in additional insurance costs if they pass through high-risk areas.

Walker said many firms are choosing the Cape route as the safer financial option.

South Africa’s bunkering opportunity, and limits

The rerouting of ships presents an economic opportunity for South Africa, particularly in supplying fuel and provisions to passing vessels.

Algoa Bay is emerging as a key offshore refuelling point, with barges already servicing ships along the route.

However, South Africa faces stiff competition from established global bunkering hubs such as Singapore and Rotterdam, as well as regional rivals like Namibia and Mauritius.

Walker said regulatory challenges and past tax decisions have weakened South Africa’s competitiveness.

Regulations cost South Africa's market share

A decision by authorities to tighten customs and excise rules around fuel imports led to uncertainty in the market.

Ships refuelling offshore were previously not subject to certain import duties, but enforcement changes in 2023 disrupted operations and eroded confidence.

This allowed competitors to gain ground while South Africa worked to resolve regulatory issues.

Maritime security concerns reshape global trade

The shift in shipping routes reflects deeper concerns about maritime security in the Middle East.

Walker said the principle of safe and uninterrupted navigation is increasingly under strain.

“The idea that ships will arrive without being blocked or hindered anywhere in the world has been taken for granted,” he said.

That assumption is now being challenged, particularly in regions with strategic choke points like the Red Sea and the Strait of Hormuz.

Economic impact felt beyond shipping

The longer Cape route increases global shipping costs, which could ripple through international trade and affect economies far beyond the conflict zone.

While South Africa may benefit from increased maritime activity in the short term, the broader impact of instability in the Middle East could drive up costs for goods and fuel.

Walker warned that even if the conflict subsides quickly, confidence in traditional shipping routes may remain shaken for months.

For more information, listen to Walker on 702/CapeTalk’s The Money Show using the audio player below: