The Middle East’s transport and logistics sector is navigating one of its most turbulent periods in years, as regional conflict, soaring shipping costs, and shifting trade routes are disrupting the movement of goods and passengers.
Rising shipping costs through Hormuz
Tensions in the Gulf are once again centering global attention on the Strait of Hormuz, the world’s most critical oil chokepoint.
Following US strikes on Iranian nuclear facilities, tanker insurance and shipping costs have more than doubled since mid-June, even as oil prices fell. While Iran’s parliament voted to close the waterway, analysts believe a total blockade is unlikely, given Tehran’s own reliance on the strait for exports.
Freight and aviation disruptions
The ongoing Israel–Iran conflict continues to rattle supply chains. Container giant Maersk suspended operations at Israel’s Port of Haifa earlier this summer, and while partial services have resumed, cargo volumes remain well below normal levels.
Air travel has also been hit. Qatar’s temporary airspace closure forced Qatar Airways and other carriers to suspend or reroute flights, straining capacity across the region.
These disruptions have spilled over into freight forwarding, with delays and cost increases weighing on logistics providers worldwide.
Land corridors and infrastructure projects gain importance
In contrast, overland routes are gaining momentum. The UAE–Israel land corridor, operational since December 2023, has cut freight transit times between the Gulf and Israel from 14 days by sea to just four days by road through Saudi Arabia and Jordan.
Meanwhile, Iraq is pushing ahead with its ambitious Development Road project, linking the Grand Faw Port to Turkey and Europe through a new highway and rail network. Combined with the newly introduced TIR customs system, the initiative is already reducing transit times from Europe to the UAE by nearly 60%.
Port closures and trade delays
The crisis in the Red Sea has proven devastating for some sections of Israeli maritime trade. Following months of disruption from Houthi attacks, the Port of Eilat declared bankruptcy and shut down completely in July 2025, cutting off one of Israel’s key sea gateways.
Beyond Israel, ripple effects are being felt across commodity markets. India’s basmati rice exports to Iran, roughly 100,000 tonnes, remain stalled at ports, underscoring the vulnerability of agricultural supply chains.
Resilience Amid the Turmoil
Despite these headwinds, pockets of resilience remain. Abu Dhabi International Airport reported a 13.1% increase in passenger traffic in the first half of 2025, handling 15.8 million travelers. However, not all carriers are weathering the storm; low-cost operator Wizz Air is preparing to exit Abu Dhabi, citing instability.
Regional companies are also shoring up contingency plans. Gulf-based logistics operators are activating crisis teams, securing critical staff, and stress-testing supply chains to guard against further escalation.
Realignment in the transport sector?
As the Adani Group Chairman Gautam Adani noted in his June AGM, “wars in the Middle East cast long shadows over global energy and logistics.” With tanker costs climbing, ports shutting down, and overland corridors rising in importance, the region’s transport sector could be entering a period of profound realignment.
For shippers, airlines, and logistics providers, resilience, flexibility, and the ability to rapidly pivot routes may define survival in a market where conflict and commerce remain inextricably linked.