Will Rising Oil Prices in Malaysia Affect the Logistics Industry?

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Crude Oil “Out of Control”: Air and Sea Freight Are Being Reshaped

On March 30 (local time), West Texas Intermediate crude oil futures for May delivery on the New York Mercantile Exchange settled at $102.88 per barrel, while Brent crude futures closed at $112.78 per barrel.

A surge in crude oil prices triggered by geopolitical tensions in the Middle East is pushing the global air and sea freight industry into a dual crisis of cost and operations.

The Strait of Hormuz has seen near disruptions in shipping activity, while the Red Sea route remains highly volatile. Global oil prices have recorded their largest monthly increase since the Gulf War, driving fuel costs sharply higher, surcharges rising rapidly, port congestion worsening, and major shipping routes partially suspended. Every link in the global logistics supply chain is being impacted by the ripple effects of rising crude oil prices.

This is not a simple cost increase, but a fundamental restructuring of the global shipping and logistics landscape.

As fuel costs become an unbearable burden for companies and control over key shipping lanes turns into a geopolitical bargaining chip, the operational logic of the air and sea freight industry is being rewritten.

In this issue, we focus on the comprehensive impact of surging crude oil prices on global air and sea freight, analyzing the current challenges and future shifts in the industry.

01. Crude Oil Surge: Geopolitical Conflict Triggers an Energy Crisis

This round of oil price increases is not a normal cyclical fluctuation, but a typical geopolitically driven shock. The Strait of Hormuz is a vital artery for global crude oil transportation.

Since late February, after military actions taken by the US and Israel against Iran, this key waterway—responsible for about 20% of global seaborne oil trade—has faced disruptions. Global oil prices have been hit hard. Data shows that vessel transits through the strait in March dropped by 95% compared to pre-conflict levels.

Meanwhile, the Bab el-Mandeb Strait, connecting the Red Sea and the Gulf of Aden, accounts for about 12% of global seaborne oil trade. Threats from the Houthi movement have turned this route into another potential “Hormuz,” fueling growing market concerns over dual-route blockades. Persistently high crude oil prices have directly delivered a severe cost shock to the highly fuel-dependent air and sea freight industry.

U.S. President Donald Trump stated that if Iran does not soon accept a peace agreement and reopen the Strait of Hormuz, the U.S. will destroy its oil hub on Kharg Island, along with oil wells and power infrastructure.

He also revealed that the U.S. and Iran are engaged in “serious negotiations,” while warning that failed talks could lead to military strikes. Markets are concerned that escalating tensions could further disrupt global energy supply. (Source: CCTV News Client)

02. Shipping Market: Surging Surcharges Everywhere

Sea freight, as the main artery of global trade, is the sector most directly and severely impacted by the surge in crude oil prices. Due to route blockages, hundreds of oil tankers, container ships, and bulk carriers have been forced to remain idle on both sides of key straits.

Global shipping lines have shifted from relatively cautious measures such as suspending new bookings and slow steaming in safe waters to halting orders entirely, seeking alternative routes, and discharging cargo at safe ports for transshipment.

In response to the security situation, major global carriers such as MSC (Mediterranean Shipping Company) and CMA CGM have issued notices suspending transits through the Strait of Hormuz. CMA CGM further announced that its vessels will reroute via the Cape of Good Hope. (Source: International Shipping Network)

What does rerouting via the Cape of Good Hope mean? Longer voyages, extended transit time, and doubled fuel consumption.

Fuel costs account for 30%–40% of shipping companies’ operating expenses. The surge in oil prices has directly triggered a global wave of surcharge increases. Combined with port congestion and route disruptions, operating costs in the shipping industry have risen exponentially.

As of March 27, major carriers including MSC, Maersk, CMA CGM, and Hapag-Lloyd have all announced emergency fuel surcharges (EFS/EBS), reaching up to $900/TEU. CMA CGM imposed surcharges of $265/TEU for dry containers on long-haul routes, $320/TEU for reefer containers, and up to $900 for oversized cargo. Maersk added $200 per 20-foot container and $400 per 40-foot container on global long-haul routes.

Hapag-Lloyd’s CEO stated that the Middle East conflict has increased the company’s operating costs by $40–50 million per week.

Port operations are also under severe strain. According to monitoring by shipping data platform Xeneta, more than 80% of the 454 monitored ports worldwide are in a “crisis state,” with 60%–70% experiencing severe congestion, pushing port operations close to a semi-paralyzed state.

Route risks have directly led to widespread service suspensions. As of March 27, five major shipping routes have been suspended, affecting a total capacity of 44,507 TEUs. Four of these are Far East–Middle East routes and one is a Europe-origin route. Capacity on key Far East–Middle East trade lanes has dropped by over 60%.

Even when some carriers resume bookings on Middle East routes, they rely on multimodal transshipment solutions, with no direct sailings through the Strait of Hormuz restored. Transit times have been extended by 3–7 days compared to normal conditions.

In addition, war risk insurance rates for passage through the Strait of Hormuz have surged from typically below 1% of vessel value to 3.5%–10%. For a liquefied natural gas carrier valued at $200 million, a single transit could incur insurance costs of tens of millions of dollars. (Source: sana)

03. Air Freight Market: Soaring Rates and Collapsing Capacity

If the challenges in sea freight are driven by the dual pressure of cost and congestion, then the crisis in air freight is intensified by rising fuel costs and shrinking capacity.

Fuel cost is the core issue. Before the conflict, jet fuel prices were around $85 to $90 per barrel. They have now surged to $150 to $200 per barrel, an increase of over 76%, reaching recent highs. Fuel cost, often referred to as the “lifeline” of airline operating expenses, typically accounts for 30%–40% of total costs. (Source: Tencent News)

According to the latest WorldACD data, global air freight rates rose another 10% in mid-March after an 8% increase the previous week. Meanwhile, TAC Index data showed a further 6.2% increase, highlighting sustained upward pressure. In response to rising fuel costs, airlines have begun increasing fuel surcharges.

Carriers such as Spring Airlines, Juneyao Airlines, and Xiamen Airlines have already raised international fuel surcharges. Cathay Pacific increased its fuel surcharge twice within 10 days, with a total rise exceeding 174%.

As early as March 11, Spring Airlines announced adjustments to fuel surcharge standards for certain international routes starting March 12. Several routes saw increases of up to 180 RMB, mainly covering destinations such as Thailand, Cambodia, Vietnam, Singapore, and Malaysia. According to Juneyao Airlines, fuel surcharge standards for routes between China and Southeast Asian countries were also adjusted starting March 20. (Source: China Business Network)

“The air freight market on Middle East routes is no longer about price—it’s that there are barely any cargo flights operating at all,” said a freight forwarder interviewed by Cls.

To cope with surging fuel costs, global airlines have launched large-scale capacity reduction plans. Flight cuts and route suspensions have become common, with some adjustments extending through late May.

United Airlines CEO Scott Kirby stated that due to soaring jet fuel prices caused by the Middle East conflict, the airline will cancel about 5% of its short-term flight schedule. Qatar Airways has parked around 20 aircraft in Spain due to strict restrictions on departures and arrivals in Doha. Cathay Pacific has also suspended its Dubai and Riyadh routes until the end of May.

04. Linkage Effect

The sharp surge in crude oil prices has brought not only short-term cost pressure to the global air and sea freight industry, but also long-term structural challenges to its development.

Route disruptions, increased rerouting, and multimodal substitution have become frequent, gradually transforming a once stable logistics chain into a dynamic system that requires real-time adjustments. During transportation, cargo may need to switch repeatedly between air and sea freight, or even be transferred across multiple regions to complete delivery, significantly increasing route uncertainty.

This shift has a direct impact on freight forwarding and consolidation companies. Businesses are no longer simply executing predefined shipping plans; instead, they must constantly determine which routes are still viable under rapidly changing conditions.

The concept of “estimated transit time,” once relatively stable, is gradually losing its reliability. For freight companies, this translates into increased customer inquiries, higher operational pressure, and rising after-sales costs. Industry competition is also shifting from “price and speed” toward “stability and information transparency”.

At the same time, rising oil prices are continuously transmitting cost pressure across multiple layers of the supply chain. From emergency fuel surcharges imposed by shipping lines, to airline fuel surcharge increases, and further to rising channel costs for freight forwarders and consolidation platforms, all of these ultimately feed into end-user shipping rates. As a result, the impact of rising crude oil prices is no longer limited to energy or transportation costs, but is reshaping the entire logistics ecosystem through a chain of transmission effects.

05. Conclusion

This oil price storm triggered by the conflict in the Middle East is no longer just an energy market issue. Through surcharges, rerouting, cargo suspension, and rising freight rates, its impact is gradually spreading to every business and individual that relies on cross-border logistics. Geopolitical risk has become a constant factor, while operational efficiency and resilience are now the core competitive advantages.

This is both a stress test and the beginning of industry differentiation. The ability to provide relatively stable services amid uncertainty will become the key to competitiveness in the logistics industry.

Written by: WePost Marketing Department – SUN GEYAN