Global supply chain disruptions are not universally negative; they create niche economic booms. When Houthi attacks forced ships to bypass the Red Sea and circumnavigate Africa, ship fuel suppliers in Southern African ports saw a massive, unexpected surge in business as they became essential refueling stops on the new routes.
When a ship is already in a crisis zone and its insurance is canceled, it has no choice but to renew at exorbitant rates. This triggers an immediate, intense negotiation—a 'slugfest'—between the ship owner and the cargo owner to determine who is contractually obligated to absorb the massive, unforeseen costs.
Major container lines will divert entire fleets on longer, more expensive routes around continents based solely on the threat of attack, as seen with the Houthis in the Red Sea. The perception of risk, not just the occurrence of incidents, is a primary driver of costly, system-wide disruptions in logistics.
A little-known feature of marine insurance is that the war risk component can be canceled by insurers with just a few days' notice during a crisis. Shippers are then forced to repurchase coverage at premiums that can be 10 to 30 times higher than the original rate, drastically altering voyage economics.
The disruption in the Persian Gulf affects not just the headline commodities of oil and gas, but also crucial dry bulk goods. Outbound fertilizers and aluminum, along with inbound raw materials for production, are significantly impacted, causing spikes in global markets for these specific goods.
Insuring a sea voyage is not a single policy. It involves a complex ecosystem: the ship owner has Protection & Indemnity (P&I) insurance for the vessel, the cargo owner has 'all-risk' insurance for the goods, and the charterer may have liability insurance. This layered approach complicates claims and liability in a crisis.
Beyond insurance and logistics, the paramount concern is human life. In the Strait of Hormuz, a vessel was immediately abandoned by its crew after being hit, without attempting to fight the fire. This highlights that crew willingness to enter a high-risk zone is the ultimate, non-negotiable variable in supply chain continuity.