The escalating conflict in the Middle East has triggered the de facto closure of the Strait of Hormuz and continued disruptions in Suez Canal transit, which has remained depressed since 2024 and has not recovered since. The Suez Canal is one of the main chokepoints in the world with around 10% to 15% of world commerce passing through it. This commentary presents our view on the impact of these disruptions across our European port terminals rated portfolio.   

Key highlights include the following:
-- Disruptions to transit through the Strait of Hormuz and in the Red Sea have prompted several shipping lines to suspend operations along this route. The Suez Canal has been interrupted since 2024, and volumes have not yet been back to the canal. 
-- We now expect the longer route through Cape of Good Hope in South Africa to be the new established route, with a continued impact on European ports affected by the rerouting. However, European ports in general have already diversified their trading routes with the Middle East because of continued disruptions.
-- Primary ports of call in Atlantic regions might experience some temporary operational disruptions although overall are well placed to continue receiving volumes.

“We expect Mediterranean ports close to the Suez Canal to continue experiencing a decline in transshipment while the tensions continue”, said Ana Relanzón, Vice President of European Asset Finance. “Western European and Atlantic ports, on the other hand, could benefit in terms of volume but might experience temporary congestion and delays in the context of ongoing expansions at key European ports.”

Source, Morningstar DBRS