The impact of the Strait of Hormuz blockade on the automotive industry

The U.S.-led campaign against Iran is reshaping global shipping routes, supply chains, and auto costs

Since the airstrikes began on February 28, the U.S.-led campaign against Iran has roiled industries and multinational companies that depend on trade and energy, and the auto sector has not been spared.

At the heart of the issue is that the Strait of Hormuz has effectively been blocked. Roughly one-fifth of the world’s oil each day—as well as other key cargo such as raw materials and finished goods—must be transported through this narrow waterway.

In a report released earlier this month, S&P Global Mobility noted that shipping companies, fearing being drawn into the fighting, have begun avoiding the Strait of Hormuz. The real-world impact is tantamount to a blockade: insurance premiums have surged, alternative routes have lengthened travel times, and the global shipping system has begun to grind to a halt.

Analyst Stephanie Brinley wrote that the Asia-sourced auto parts needed for European auto production are being hit most directly, with just-in-time supply chains facing enormous pressure.

Brinley said that the risk of routing through the Strait of Hormuz has led to “rising cargo and vessel insurance costs, while shippers’ logistics costs for selecting alternative routes have also increased.”

The ripple effects go far beyond insurance expenses. Ships rerouting around the strait cause containers and goods to deviate from their original destinations, and subsequent shipping contracts are therefore also hit in a domino effect.

Sam Fiorani, a manufacturing expert at a company offering auto forecasting solutions, also said that this kind of spillover impact will bring significant costs.

“Having freight vessels detour around the Strait of Hormuz would add several days, even weeks, to travel time, driving up freight rates and causing backlogs as cargo turnover slows. This doesn’t even account for the additional costs brought by rising ‘war risk insurance premiums.’” he wrote.

In addition, some cargo ships consume as much as 200,000 gallons of diesel per day, and at this moment diesel prices are skyrocketing.

There are also ripple effects at the supply-chain level.

S&P Global’s Brinley pointed out that among auto-producing countries, Turkey is being hit especially hard. She warned that supply-chain disruptions will “affect Turkey’s auto production earlier than other regions.” Given that Turkey is a major supplier of light commercial vehicles for the European market, the impact is significant.

But it isn’t only Turkey and European automakers that are affected.

“Although Iran itself is not a semiconductor-producing country, disruptions to global shipping caused by the conflict will lead to delays in chip deliveries—or chips will be stranded in ports across Asia—resulting in a shortage of chips for automotive assembly lines.” Fiorani added, “Each modern car can require up to 3,000 chips, and the industry has not fully recovered from a series of supply-chain problems over the past five years; yet another round of disruptions will further exacerbate its vulnerability.”

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责任编辑：郭明煜