Nigerian shippers brace for rate hikes as Middle East conflicts force shipping giants’ reroutes

Nigerian shippers are bracing for a rise in freight costs and delays at sea as shipping giants reroute vessels away from the Red Sea and Suez Canal, the major routes for cargo to and from Nigerian ports to Asia, amid escalating attacks in the Middle East.

Just days after CMA CGM announced plans to resume full Suez Canal operations in Q2 2026, the world’s third-largest container ship operator abruptly reversed course, pulling major Asia-Europe services back around Africa through the Cape of Good Hope.

“The complex and uncertain international context” is why CMA CGM said it abandoned the shorter route, offering no timeline for when it might reconsider.

Meanwhile, Maersk, the world’s third-largest container ship, despite confirming its structural return to the Red Sea route weeks earlier, has now withdrawn from that decision and has again suspended transits through the Red Sea/Bab el-Mandeb Strait, rerouting vessels around Cape Town, citing “deteriorating security situation” and “unforeseen constraints” in the region. Others have joined the bandwagon.

Read also: Maersk, Hapag-Lloyd Red Sea return cuts time, cost for Nigeria-bound cargo

Their recent decisions come following attacks from the US and Israel on key Iranian facilities that have sparked deadly retaliatory action across the region.

The repeated cancellations and sudden reroutes are expected to drive up freight costs, making it impossible for shippers to predict delivery schedules, threatening the competitiveness of Nigerian goods in crucial overseas markets.

“We are going to see longer days of cargo arrivals, and a very high freight rate coming up from tomorrow,” Aminu Umar, president of the Nigerian Chamber of Shipping, told BusinessDay.

The traditional Suez Canal-Red Sea route to Asia is the shortest at 30 to 35 days transit time, saving roughly two weeks of fuel and operational costs compared to the alternative. The alternative route around Africa’s Cape of Good Hope adds weeks to the calendar, along with thousands of dollars in fuel and handling costs per shipment.

Nigeria’s exporters are particularly vulnerable because shipping costs already consume a large portion of their margins. “Freight is already on the high side,” said Kola Awe, a Nigerian commodity exporter with shipments already headed for Asia. “Logistics is between 25 to 26 to 30 percent of our FOB value. So we’re on the high side.”

Without a national shipping line or sufficient investment in indigenous shipowning, Nigerian cargo is at the mercy of foreign shipping lines, which pass rising costs directly to shippers.

The cascading cost increases threaten Nigeria’s position in Asian markets, where competition from other suppliers is fierce. Higher freight rates could price Nigerian products out of the market. Awe said he is bracing for impact.

“[The shipping companies] always take advantage. They charge more. If they charge more, nobody, no shipper has any other alternative but to pay. Naturally, that affects our competitiveness,” he told BusinessDay.

The disruption is already rippling through the maritime sector. Very large crude carriers have seen freight rates “skyrocket,” industry leaders said, warning that container rates will follow as vessels pile up in the Arabian Sea and Indian Ocean, unable to discharge cargo through the blocked route.

“If oil price jumps, which is most likely, there is no way freight will not go up, because bunker prices will also rise,” Umar said. “It’s going to be a huge disruption.”

The global oil benchmark reached an 8-month high of $73 a barrel on Friday, over concerns about attacks that began the following day. Brent crude is expected to start the week at $80 a barrel with possible subsequent rises.

Read also: Oil jumps 10% on Iran conflict and could spike to $100 a barrel, analysts say

But things could get even worse. For goods destined to Gulf countries and beyond, buyers facing extended delays may invoke force majeure clauses in contracts, “which means they will have to suspend the contract pending when the matters are clear,” Umar said.

When this happens, exporters are left stranded with goods either sitting in warehouses or stuck on ships “If the goods are perishable goods that are not going to withstand long, then the shipper is going to lose almost all their goods.” And that is not good business for anyone “We all lose. Everybody loses.”

Insurance can provide some protection, but only if exporters have adequate coverage. Those without comprehensive policies face catastrophic losses. “Many people will lose a lot of money,” Umar said. “Economically, this is something that is going to make people suffer a lot.”

The measured impact on Nigeria’s shippers is expected to become clearer this week as shipping companies finalise their routing decisions. “It’s something that nobody can predict, the likely outcomes. But when the markets open tomorrow, we will start to see the effects,” said Umar.

Bethel Olujobi reports on trade and maritime business for BusinessDay with prior experience reporting on migration, labour, and tech. He holds a Bachelor's degree in Mass Communication from the University of Jos, and is certified by the FT, Reuters and Google. Drawing from his experience working with other respected news providers, he presents a nuanced and informed perspective on the complexities of critical matters. He is based in Lagos, Nigeria and occasionally commutes to Abuja.

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