As tensions between Iran and Israel threaten to spiral into a broader regional conflict, the Indonesian Logistics and Forwarders Association (ALFI) Institute is sounding the alarm: global logistics costs may be about to surge.
At the heart of this concern is the Strait of Hormuz, a narrow but crucial chokepoint through which nearly a third of the world’s oil trade flows. If the conflict escalates to the point of disrupting this vital route, potentially through a blockade, it could send shockwaves through international trade, driving up costs and jeopardizing supply chains across Asia-Pacific and beyond.
Yukki Nugrahawan Hanafi, Chairman of the ALFI Institute, emphasized the growing unease among logistics and transportation players who are closely monitoring the situation.
“Currently, international and national supply chain actors are assessing the risks associated with navigating waters near the Strait of Hormuz,” Yukki said on Wednesday, June 18.
“If mitigation measures are put in place, the flow of logistics through these waters could decline, leading to major disruptions in the global supply chain.”
According to the International Energy Agency (IEA), roughly 20 million barrels of crude oil pass through the strait each day, amounting to nearly 30 percent of global oil trade. In addition, liquefied natural gas (LNG) shipments through the same passage account for about 20 percent of the world’s LNG supply.
The strategic significance of the Strait of Hormuz makes it a flashpoint for global markets. A full-scale blockade or even the credible threat of one would likely send oil and gas prices soaring. This, in turn, would directly impact international logistics costs—affecting everything from freight rates to operational expenses.
Yukki noted that energy prices are already under pressure due to geopolitical instability, and any further escalation would compound the cost burden for shippers and supply chain operators.
“The rising cost of energy commodities, particularly crude oil, will inevitably feed into logistics expenses, which could hurt export-import performance and weaken the competitiveness of Indonesian goods,” he said.
Moreover, Yukki warned that tensions in the Strait of Hormuz could trigger a domino effect in other key shipping lanes, notably the Red Sea, a region already affected by past conflicts.
“There’s a very real concern that actions in the Strait of Hormuz could provoke further instability in the Red Sea,” he added.
The warning comes against a backdrop of sluggish global demand and ongoing trade tensions throughout 2025, which have already placed pressure on exporters.
“If a blockade does materialize as part of Iran’s retaliation against Israel, logistics costs will spike not only due to rerouted trade paths but also from increased fuel and insurance costs,” Yukki said.
He pointed to the late 2023–early 2024 Red Sea crisis as a recent example, when shipping firms faced extended transit times and soaring transportation expenses amid attacks on vessels and increased security measures.
Given the mounting risks, Yukki urged Indonesian businesses to prepare for potential disruptions.
“National supply chains will inevitably feel the impact if logistics routes are hindered. Companies must remain vigilant and proactive in adapting to these rapidly shifting geopolitical dynamics,” he concluded.
As the world watches developments in the Middle East with growing apprehension, logistics professionals and global trade stakeholders alike are bracing for turbulence—on the seas and in the markets.