Hormuz crisis exposes global trade risks as UAE bets on alternative routes

The disruption surrounding the Strait of Hormuz is highlighting the global trade's vulnerability to a single chokepoint, forcing businesses to seek costly alternatives as geopolitical tensions reshape shipping, energy, and supply chains. The UAE, aiming to mitigate such risks, is testing its long-standing strategy of building alternative ports, logistics networks, and trade corridors.

Fahad Al Gergawi, Undersecretary at the UAE Ministry of Foreign Trade, emphasized that the UAE has adopted a model of preparedness, deviating from the region's approach. However, he acknowledged the unprecedented scale of the current crisis, as the region is experiencing direct conflict for the first time. The UAE's strategy avoids dependence on a single route or mode of transport, focusing on multi-model supply chain logistics.

Khorfakkan port offers an alternative route, bypassing the Strait of Hormuz, but building an entire ecosystem to quickly reroute cargo remains a challenge. The crisis is reconfiguring energy flows and trade routes, particularly affecting weaker economies, with potential inflationary impacts on energy products. Trade cannot be separated from security, as the Strait of Hormuz exemplifies, leading to the possibility of "liquid alliances" or "frenemies" where countries continue trading despite political disagreements.

Smaller economies must build resilient bridges rather than erect walls, ensuring connectivity without sacrificing resilience.