Supply Chain Watch — 2026-03-23
Global supply chains remain under severe stress this week as the Strait of Hormuz crisis continues to ripple through maritime and air freight networks, driving air cargo rates up as much as 70% on select routes. The port of Salalah has technically restarted operations following the March 11 drone strike, but war risk insurance complications may keep major carriers from reinstating it in their networks. Meanwhile, ongoing U.S. tariff policy continues to reshape trade lane economics, with US West Coast container volumes dropping by double digits as carriers pivot investment toward India.
Supply Chain Watch — 2026-03-23
Top Disruptions & Developments
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Salalah Terminal Restarts — But Insurance Threatens Hub Viability: Container operations at the Port of Salalah (Oman) resumed following the March 11 drone strike, but the port's JWC war risk listing and P&I club cancellations could prevent major carriers from reinstating Salalah in their networks. The hub's long-term viability as a regional transhipment point now hinges on whether underwriters revise their war risk designations.
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Air Freight Rates Surge Up to 70% on Select Routes: Air freight rates have risen by as much as 70% on some lanes since the start of the U.S.-Israeli war on Iran, according to Reuters, as the conflict limits available flight paths, blocks ocean shipments, and pushes up jet fuel costs. Xeneta Chief Analyst Peter Sand noted port congestion, deteriorating schedule reliability, longer transit times, and widespread surcharges as expected knock-on effects from the escalation.
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Gulf Importers Scrambling to Reroute Essential Goods: Importers across Gulf states are urgently seeking alternative routes for critical commodities — including food, medicines, and industrial supplies — as the effective closure of the Strait of Hormuz continues to disrupt normal shipping flows.
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Carriers Pour Billions Into India as US West Coast Volumes Drop: Hapag-Lloyd, MSC, CMA CGM, and Maersk are deepening commitments to Indian ports and reflagging operations as US West Coast container volumes decline by double digits amid tariff-related uncertainty. The pivot underscores a structural realignment of carrier investment away from the transatlantic and transpacific lanes toward South Asian corridors.
Shipping & Freight Market
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Asia-US Container Rates Edge Higher Amid Conflict-Driven Congestion: Per Hellenic Shipping News, Asia-US container rates are ticking upward as the Middle East conflict drives port congestion, deteriorating schedule reliability, longer transit times, and surcharges across the board. Chemical tanker rates ex-US Gulf have surged on the same geopolitical drivers.
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Flexport: Ocean and Air Freight Networks Disrupted Globally: Flexport's latest market update confirms the Middle East escalation is disrupting both global ocean and air freight networks simultaneously — a dual-mode shock that is compressing capacity and forcing shippers to choose between unreliable ocean routing and sharply more expensive air options.
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Red Sea Recovery Pushed Back Further: Vespucci Maritime CEO Lars Jensen, speaking at TPM26 by S&P Global, noted that Red Sea market recovery has been pushed back as the Iran conflict compounds existing disruptions. Congestion dynamics are expected to trigger additional surcharges in the weeks ahead.
Trade Policy & Geopolitics
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2026 Trump Tariffs Average $700 Tax Increase Per US Household: According to the Tax Foundation's updated tariff tracker, the current round of Trump-era tariffs amounts to an average tax increase of $700 per US household, and have not meaningfully altered the trade deficit they were designed to address. The tariff burden continues to weigh on import-dependent supply chains and has contributed to the double-digit decline in US West Coast container volumes.
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Russia Increases Ship-to-Ship Oil Transfers as Western Sanctions Bite: Russia has stepped up oil product exports via ship-to-ship (STS) transfers following Western sanctions and harsh winter weather, which together have created a shortage of suitable tankers to serve Russian ports, according to Reuters and LSEG data. Traders confirm the STS workaround is being used at increasing frequency, adding opacity and logistical complexity to global energy supply chains.
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US Section 301 Investigation Could Affect Canada: RBC's Trade Zone analysis flags that the U.S. Section 301 investigation carries implications for Canadian supply chains, introducing yet another layer of bilateral trade policy uncertainty that logistics planners must monitor.
Industry Analysis
The dominant thread across this week's supply chain developments is the compounding interaction of geopolitical conflict and trade policy uncertainty. The Strait of Hormuz disruption is no longer merely a routing problem — it is now translating into insurance market seizure, with Salalah's JWC war risk listing potentially removing a key transhipment hub from carrier networks even after operations technically resumed. Simultaneously, the 70% spike in air freight rates on certain corridors signals that cargo owners are willing to absorb dramatically higher costs to maintain supply continuity — a dynamic that will benefit airfreight operators but further squeeze margins for manufacturers and retailers. The carrier pivot toward India, driven by tariff-induced US West Coast volume declines, suggests that the structural reshaping of global trade lanes — long predicted — may now be accelerating in real time, with potentially lasting implications for port infrastructure investment and carrier alliance configurations.
What to Watch Next Week
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War Risk Insurance Decisions at Salalah: Monitor whether P&I clubs and JWC underwriters revise their war risk designations for Salalah Port. If the listing is not removed, major carriers may formally announce routing changes that bypass the hub — with cascading effects on Gulf transhipment capacity.
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Air Freight Rate Trajectory: Watch whether the 70% rate spike on Middle East-affected air corridors stabilizes, accelerates, or triggers a modal shift back to ocean as Hormuz routing alternatives emerge. Any ceasefire signals or diplomatic movement could deflate rates rapidly.
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US Section 301 Investigation and Canadian Trade Response: The RBC analysis flagging the Section 301 investigation's potential Canadian implications warrants close attention next week, particularly as any new tariff or retaliatory measures would add further complexity to North American supply chains already absorbing tariff shocks.
Reader Action Items
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For supply chain professionals: Conduct an immediate routing audit to identify any shipments transiting through Salalah or relying on Hormuz-adjacent lanes. Develop contingency routing via alternative transhipment hubs (e.g., Jebel Ali, Colombo, Singapore) and secure capacity now before congestion surcharges become mandatory across more carriers.
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For import/export-dependent businesses: Review landed cost models to account for the $700-per-household average tariff burden now embedded in US import costs, and evaluate whether nearshoring or alternate sourcing geographies — particularly in India, given carrier investment signals — could reduce tariff and route-risk exposure over the next 12–18 months.
IMPORTANT: This report contains ONLY information found in the sources cited above. All claims are traceable to specific search results.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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