Hormuz Rerouting Doubles Cape Traffic Without Delivering a Windfall
Over the past seven months, shipping traffic through the Strait of Hormuz has dwindled to a trickle, with Iran effectively closing the critical maritime chokepoint ever since the U.S. and Israel launched attacks against it. Consequently, major global shipping companies rerouted their vessels via South Africa’s Cape of Good Hope, with traffic around the southern tip of Africa having doubled since…
In the past seven months, shipping traffic through the Strait of Hormuz has dwindled significantly, prompting major global shipping firms to reroute vessels via South Africa's Cape of Good Hope. This has led to a doubling of traffic around the southern tip of Africa since the war began in February. However, the anticipated economic windfall for Southern Africa in the form of increased demand for bunkering fuel, port calls, and maritime services has not materialized.
Vessels are not stopping at major ports like Durban or Cape Town for bunkering, repairs, or cargo handling due to logistical and economic challenges. The South African detour is 5,000 miles longer, adding 14 days and over a million dollars in extra fuel costs per trip, making it an unattractive option for shipping companies. South African ports, including Durban and Cape Town, face serious operational inefficiencies and aging infrastructure.
The Port of Durban and Cape Town ranked dead last and second to last out of 400 evaluated global ports, respectively, due to persistent weather disruptions, equipment failures, and low berth utilization. South Africa's state-owned logistics operator, Transnet, has struggled with equipment shortages, aging cranes, limited container capacity, and inadequate rail links, exacerbating congestion around major ports.
Despite the surge in traffic, Southern Africa is not reaping the financial benefits. Port operators now face increased expenses for maritime surveillance, search-and-rescue operations, and emergency response, as more ships pass through their coastlines without entering their ports. Piracy and other maritime security risks have also increased, raising the potential cost of a major spill.
Regional energy markets are feeling the pressure as Southern African importers pay more for fuel and face stronger competition from Asian buyers for West African supplies, driving up tanker rates. Meanwhile, new energy projects in the region, such as Mozambique LNG and ExxonMobil's Rovuma LNG project, face increased security and shipping risks.
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