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Research and Briefings

Dire Straits for Commercial Shipping


With over 90% of international trade being carried by sea, the safety of commercial maritime shipping is essential to the global economy. Much of the world’s trade travels along maritime highways between Asia, Europe, and North America. Most of these routes are sailed through wide open waters, but there are a few places where narrows, straits, or other restricting features must be navigated.

Should safe navigation through these vital waters become dangerous, they could prove to be the Achilles heel of global economic growth and prosperity. It is therefore not surprising that the potential closing of two of those essential waterways in the Middle East — the Bab el-Mandeb Strait and the Strait of Hormuz — raises questions about insurance coverage for delay, voyage frustration, and possible deterioration losses.

Dire straits for commercial shipping explains the concerns, insurance considerations, and the need for vessel operators, charterers, cargo owners, and their financiers to understand the limitations of their insurance cover, should the potentially grave economic risk of waterway closures or sanctions in the Middle East escalate further.