- GPS Jamming Cuts Vessel Traffic in Hormuz by 20%.
- Freight Rates Surge as Ships Avoid Night Transits in Hormuz.
- VLCC Spot Rates Jump $70,000 Amid Hormuz Tensions.
Despite a tentative ceasefire between Israel and Iran, shipowners are still grappling with serious security issues in the Strait of Hormuz. The main culprit? Ongoing GPS jamming incidents are throwing a wrench in the works for vessels trying to navigate through the area, reports NBC Philadelphia.
Shipowners Report Significant Decline in Vessel Movement
Angeliki Frangou, the chairman and CEO of Greece’s Navios Maritime Partners, pointed out the persistent dangers for ships making their way through this narrow waterway. She noted that the GPS jamming has led to a noticeable drop in vessel movement and has caused longer wait times for ships looking to pass through the strait.
“We have had about 20% less passage of vessels through the Strait of Hormuz, and vessels are waiting outside,” Frangou told CNBC. “You are hearing a lot from the liner [ocean shipping] companies that they are transiting only during daytime because of the jamming of GPS signals of vessels. They don’t want to pass during the nighttime because they find it dangerous. So it’s a very fluid situation,” Frangou said.
GPS Interference Disrupts Nearly 1,000 Ships Daily
A recent estimate from the Maritime Information Cooperation & Awareness Centre, dated June 20, revealed that nearly 970 ships faced GPS signal interference each day over the previous week. This finding is backed up by shipping data from Kpler, which indicated a noticeable decline in maritime activity in the affected area.
Between June 13 and June 22, the number of unique Maritime Mobile Service Identity (MMSI) accounts used to monitor vessels plummeted from 16,127 to 7,947 across all ships. Specifically for tankers, the MMSI count dropped from 1,120 to 889 during the same timeframe.
A Critical Chokepoint Under Threat
The Strait of Hormuz serves as a crucial passage for the global oil and gas trade, with about 20% of the world’s oil and gas traversing its 21-mile-wide channel. Frangou highlighted the seriousness of the situation, considering the region’s significant geographical and logistical role.
“This is very important,” Frangou said. “For the safety of the crew and the vessel. … Safety conditions are something that is at the forefront of our minds. This is why we are constantly monitoring all this,” she added.
Freight and Insurance Costs are on the Rise
Security issues have pushed these rates higher than ever. For instance, spot freight rates from Shanghai to the UAE’s Khor Fakkan port have skyrocketed by 76% since mid-May, now averaging around $3,341 for a forty-foot equivalent unit (FEU), as reported by Xeneta.
“The reality is that yesterday [Monday] we saw that rates doubled on the passage,” Frangou said. “This can change quickly, but what we have seen is that when they go up, it’s more difficult to bring them down,” she added.
Limited Alternatives Compared to Red Sea Diversions
While ships have been rerouting through the Red Sea to steer clear of attacks since December 2023, vessels heading to ports beyond the Strait of Hormuz find themselves without any alternative routes. This leaves tanker and containership owners with few options but to brave the increasingly perilous waters of the strait.
“The spot market for VLCC [very large crude carriers] has moved up $70,000 per day,” Frangou said. “So even though oil has not gone up, we saw the VLCC rates, the very large Crude Carriers, have gone up. It is very much wait-and-see,” she added.
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Source: NBC Philadelphia
