Container Bytes #40: The Ceasefire Collapse and July's Record-Breaking Volume

So for a change, let's start with the Strait of Hormuz.

Like we discussed last week, things already were shaky.

There was more Iranian attacks, and there was US retaliation, and seemingly over the last week or so, it's gone from bad to worse.

Are we back to where we were before the June ceasefire?

So, um, in many ways, yes.

So as you said, there have been, uh, Iranian attacks trying to establish itself as the authority over the strait, meaning that any vessels that wanna come or go have to get their permission, have to pass through the kind of narrower channel on the northern part of the strait along the coast of Iran, um, which was the case during the, um, you know, before the ceasefire.

The US sees this as a breach of the memorandum of understanding, that there's supposed to be free transit and, you know, free passage and without any fees, at least for the 60 days from the time that the, that the agreement was signed.

But Iran is saying that it's closed for vessels that don't have permission.

The US is saying that the strait is open, really, really meaning through the southern channel, but there are very few takers because Iran is attacking vessels that take that route, and so there are very few that are kinda willing to take that risk.

So we've seen, you know, a big drop in, in the number of, um, transits.

And the US has re-implemented its blockade.

So those are kind of the two aspects, Iranian attacks on ships and US blockades for, um, Iranian-linked vessels, and that's back in place.

So it really is kind of back to the drawing board in terms of where things were before the ceasefire, with one additional part, which is that, uh, President Trump went on social media and made several pronouncements.

One is that the blockade was gonna be back in place, which did happen.

And then two others, one is that the US is going to take over control of the strait and, and, uh, you know, be the guardian of the strait, and second, that the US is going to apply 20% fees on the value of cargo going back and forth.

Now, again, these are pronouncements on social media.

These don't have, you know, necessarily, I don't know, practical, uh, implications, um, necessarily, and there was really kind of a, a quick backlash against the 20%, which would be, you know, many millions of dollars for tankers and, you know, I don't know, thousands of dollars if you broke it down per container.

And that today has been kinda dialed back, and now he's saying that, uh, you know, Gulf States are gonna contribute.

The other fundamental part is what does that mean the US will be the guardian of the strait? I think if the US could control the strait militarily, it would have done so already, and we see with the Strait of Hormuz and also with the, with the Red Sea, that it's easier said than done when all that needs to be done is kind of raise the risk to the point that vessels don't wanna pass.

So in many ways, yes, we're back to where we started.