As the war between Israel, the U.S., and Iran is about to reach its 1-month mark on March 28, attempts to kick-start negotiations about the terms of a ceasefire might be gaining momentum.
The U.S. put together a 15-point plan to help end the hostilities and had it delivered to Iran via Pakistan earlier this week, however, officials in Iran have since rejected the proposal, according to media reports in the country. The U.S. plan reportedly included demands for Iran to dismantle its main nuclear facilities and maintain a reduced missile arsenal for self-defense purposes only.
Meanwhile, Iran’s demands for a ceasefire deal are believed to include reparations for war-related damages, official recognition of Iran’s authority over the Strait of Hormuz and guarantees that the U.S. and Israel will not resume attacks on Iran.
While U.S. President Trump expressed the hope that a ceasefire agreement might be reached until the end of the week, his administration has also instructed the 82nd Airborne Division to deploy around 2,000 of its soldiers to the Middle East in addition to thousands of U.S. Marines already on the way to the region.
While China reportedly urged Iranian authorities to agree to peace talks, countries in the Gulf region, such as Saudi Arabia and the United Arab Emirates, are rumored to be thinking about joining the war but would only get involved if Iran goes ahead with its threat to target essential energy and water infrastructure in the region.
Over the last couple of days, Iran has continued to strike countries in the Middle East, including Israel, Saudi Arabia, Iraq, Bahrain, Kuwait, and the United Arab Emirates. In addition to maintaining strikes on Iran, Israel confirmed plans to take control of parts of southern Lebanon to establish a buffer zone with northern Israel as part of its ongoing ground offensive.
Conflict continues to disrupt ocean and air freight in the Middle East
Earlier this week, Iran announced in a letter to members of the International Maritime Organization that the Strait of Hormuz is open for vessels as long as they follow safety and security regulations introduced by Iranian officials, and do not participate in or support what Iranian authorities have called acts of aggression against the country.
Iran is also said to have started charging vessels informal fees of up to $2 million (€ 1.72 million) to transit the waterway but does not apply the system consistently to every ship yet. According to reports from a news agency close to the Islamic Revolutionary Guard Corps, the Iranian parliament is current working on a draft bill that is expected to be ready next week and would formalize the transit and payment process.
Business disruptions are still widespread in the aviation sector, too, as air traffic in parts of the Middle East remains restricted and many major international carriers have extended flight cancellations for weeks, and in some cases months, to come.
In Europe, United Kingdom-based British Airways, Netherlands-based KLM Royal Dutch Airlines, Switzerland-based Swiss International Air Lines, and Germany-based Lufthansa Group have extended cancellations on some Middle East routes well into May, with Germany’s and Switzerland’s flag carriers even cancelling many flight connections to the region until the end of October. Lufthansa Cargo will also suspend services to many destinations in the Middle East until October 24, with the exception of flights to Tel Aviv and Dubai, which will remain suspended until April 30 and May 31 respectively for now.
In Asia, a number of major airlines have also extended flight cancellations for several weeks, with Singapore Airlines and Philippine Airlines halting flights until the end of April, while Hong Kong-based Cathay Pacific Airways cancelled flights on some routes until the end of May.
Meanwhile, regional airlines in the Middle East are working on restoring some of the pre-war air cargo capacity. Emirates Airlines has reportedly resumed passenger as well as cargo flights to and from its hub at Dubai International Airport (DXB), while Etihad Airways has resumed a limited number of passenger and cargo flights from its hub at Abu Dhabi International Airport (AUH) as of late March. Israel’s flag carrier, El Al Israel Airlines, has been allowed to resume cargo transportation on passenger rescue flights from Ben Gurion International Airport (TLV) in Tel Aviv to airports in New York and London for both imports and exports and to Bangkok only for imports from March 22.
Vietnam’s flag carrier Vietnam Airlines will cancel almost two dozen domestic flights per week starting from April 1 due to the worsening jet fuel shortage in the country. In the Philippines, authorities have warned that they might be forced to ground planes completely due to the intensifying shortage of jet fuel.
Disruptions spread to rail and road logistics operators outside the conflict zone
While air and ocean carriers remain most impacted by the conflict in the Middle East, impacts are increasingly spreading to other parts of the logistics industry outside of the immediate conflict zone.
In India, one of the countries worst affected by energy- and manufacturing related impacts so far, the Association of Container Train Operators (ACTO) has reportedly asked the Indian government to treat the current crisis like a force majeure event, asking for relief on storage-related costs at ports, stabling chargers and haulage fees for empty containers to alleviate financial pressure on the sector. Rail operators are struggling to reach the minimum loads required to run services efficiently after exporters and importers delayed or cancelled shipments in response to the conflict.
In the U.S., the average price for a gallon of diesel crossed $5.20 (€4.50) nationwide last weekend, an increase of around 40% compared to pre-war levels, according to the American Automobile Association. Soaring fuel prices are a particularly pressing risk for smaller trucking companies but could also put financial stress on larger freight carriers as customers often pay freight bills around 1-2 months after shipment, leaving carriers with the burden to shoulder higher costs upfront. Customers needing to ship perishable goods via truck such as fresh food are likely to be the most exposed to the recent spike in fuel costs as their goods need to be transported within a shorter time frame and companies cannot wait indefinitely until operating costs go down again.
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