DP World CEO: Rerouting Around Hormuz Costs 4-5x More Than Shipping, Ultimately Pushing Up Consumer Prices
nashnova research
Dubai port giant DP World warns that the Strait of Hormuz shipping disruption is forcing cargo onto land routes at four to five times the cost of sea freight — a bill that will ultimately reach consumers worldwide, not just in the Gulf.
What does the land-route workaround actually look like?
DP World now trucks over 3,000 containers a day through a new overland network, serving nearly 12,000 companies in the Jebel Ali Free Zone. Under normal conditions the port handles roughly 40,000 containers a day.
This means → land routes cover less than a tenth of normal throughput. The rest either sits idle or takes a longer detour.
CEO Yuvraj Narayan put it bluntly: "Once you start substituting miles for nautical miles, the economics shift fast." On some routes, overland costs run four to five times higher than sea freight.
Who ends up paying?
Narayan warned: "You can't absorb these costs indefinitely." The longer the disruption lasts, the more likely those costs pass through to end prices.
In plain terms = ports and logistics firms can eat the extra expense for a while, but stretch it out and the added freight cost lands on the price tag — paid by consumers everywhere.
This reflects a deeper tension: central banks are fighting to bring inflation back to target, yet rising supply-chain costs are pushing prices the other way.
Can Jebel Ali be replaced?
Jebel Ali is the busiest container hub outside Asia. Its surrounding industrial zone handled $190 billion in trade in 2024 — roughly equal to Chile's total annual trade.
Responding to U.S. Treasury Secretary Scott Bessent's claim that Hormuz will be "a worthless body of water within two years," Narayan pushed back: "He's right that oil can go through a pipeline. But global trade can't."
In plain terms = finding another port or another route is doable. Rebuilding a trade ecosystem on the scale of Jebel Ali would take decades and billions of dollars.
How much have freight rates jumped — and who profits?
Xeneta data show that roughly 100 container shipping services passed through Hormuz or operated within the Gulf before the conflict. That number has shrunk drastically; only a handful remain, serving almost exclusively Iran–China trade.
Spot rates for a 40-foot container from China to Gulf ports have surged: +214% to Jeddah, Saudi Arabia, and +442% to Khor Fakkan, UAE.
This means → container liner companies are the winners. Analyst John McCown calls the period since August 2020 the "carrier advantage era" and sees the current crisis driving a third wave of rate increases.
Is the freight-rate "new normal" here to stay?
Drewry data: the six-year average container rate stands at $3,026 per 40-foot box, nearly double the pre-pandemic ten-year average of just $1,624.
In plain terms = even if the Hormuz situation eases, rates may never fall back to pre-COVID levels. Global shipping has entered a structurally more expensive era.
This reflects a fundamental shift in how ocean freight is priced: geopolitical disruptions keep recurring, and liner companies have learned to profit from each one.
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