Australia, explained.

Saudi Arabia, between the Red Sea and Straits of Hormuz (Planet Observer/Universal Images Group via Getty Images))

How Australia can navigate long-term Red Sea shipping disruptions

Route volatility is squeezing grain exports and fertiliser imports, and there are no calm waters on the horizon.

Hamed Zakikhani

6 October 20254 min read

Attacks and naval stand‑offs from the Red Sea to the Strait of Hormuz have redrawn shipping maps. Since late 2023 following Houthi attacks from Yemen on passing vessels, many liners have skipped Suez for the Cape of Good Hope, resulting in longer voyages and higher costs. Meantime, Gulf tensions fuel added uncertainty. UN Trade and Development now warns growth will stall as volatility sticks and cargo transports take longer routes.

For Australia this is not just a shipping problem but a food‑systems problem: grain and oilseeds sailing west face the same chokepoints as the fertiliser we import from the Gulf. In strategic terms, food and farm inputs are economic security. Reliability under pressure earns leverage with allies and buyers.

Operator reporting shows the pattern from the waterline. Shipping giant Maersk continues to flag detours around the Red Sea and Bab el‑Mandeb, and the Review of Maritime Transport 2024 put numbers on the shift: Suez transits fell while Cape arrivals surged. Detours are not a blip. Schedules remain elastic, war‑risk premiums are higher, and carriers sometimes cut calls to protect rotations. I would not plan on a neat return to the old map soon.

What does that mean for Australia’s exports? Start with grain and canola bound for Europe and North Africa. Canola relies on the European Union. When sailing days lengthen and insurance rises, the reliability premium looms larger. Buyers care about on‑time delivery as much as price. Tighter shipping supply shows up in higher freight, jumpier schedules and more demurrage risk. This cascades into basis, storage decisions and shelf‑life pressure down the chain. GrainCentral’s trade breakdown shows where the exposure sits.

Flip the map and you hit fertiliser. Australia brings in most of its urea and other nitrogen products from abroad, with a large share sourced from Gulf producers. WITS trade data shows the reliance, and Rabobank underlines how quickly global urea markets react to shocks. A Hormuz scare is therefore a direct farm‑input risk. Marine insurers lift war‑risk premiums for Gulf transits. Even if oil tankers grab headlines, bulk cargo transport feels the price signal too. When fertiliser costs jump, it lands on every paddock and shapes planting decisions more than speeches do.

Could Iran close the Strait of Hormuz? A full, sustained shutdown is unlikely, but meaningful disruption is plausible. CSIS is clear about the toolkit: mines, fast‑attack craft, drones and anti‑ship missiles can harass shipping and raise risk for weeks at a time. EIA shows why it matters: more than a quarter of seaborne oil and about a fifth of global LNG transits Hormuz, largely from Qatar. Even without a formal closure, that level of threat is enough to spike premiums, stretch voyages and slow loadings.

Treat route choice like a portfolio, not a coin toss.

The operational signals match that analysis. UKMTO has urged heightened vigilance, a JMIC advisory describes GNSS interference, and Reuters noted periods when masters were told to keep well clear of Iranian waters. At the same time, commercial vessels have continued to transit – evidence that even in crises complete stoppage is rare, but friction is real.

For Australia, the strategic lesson is simple: design for disruption rather than bet on calm.

A cargo ship passes close to Moreton Island, Queensland, Australia (Anastasios Antoniadis/Unsplash)

So what should we do that is practical and fast? First, treat route choice like a portfolio, not a coin toss. For grain and canola into Europe, structure forward freight so either Suez or the Cape can be chosen against clear triggers when war‑risk premia or naval advisories breach a threshold. Industry chambers and Austrade can help mid‑tier shippers pool volumes for better rates and optionality without losing flexibility.

Second, ring‑fence fertiliser security. Keep Gulf supply, but diversify origin – Indonesia and Malaysia for urea when available, Morocco for phosphates – and test a small, commercially managed buffer to cover a planting window. Think weeks, not months. This is not a permanent stockpile, instead it is a shock absorber if Hormuz jitters push prices through the roof, protecting margins at the paddock and smoothing pass‑through to food prices.

Third, buy down risk with information and standards. Pull insurer bulletins, UKMTO notes and operator updates into a single dashboard exporters actually use. Implementation should sit with the Department of Foreign Affairs and Trade and Defence (via UKMTO liaison), alongside the Department of Agriculture, Fisheries and Forestry, Austrade, major insurers and liners. This way, advisories translate into routing guidance, convoy windows and documentation expectations. For chilled cargo, hard‑wire traceability and on‑time KPIs so buyers see cold‑chain integrity when voyages stretch. For bulk, standardise weather‑and‑war clauses so risk‑sharing is predictable rather than improvised at the wharf.

Finance can help too. Export Finance Australia should pilot a time‑limited, KPI‑linked top‑up for war‑risk cover: firms that publish traceability and on‑time delivery KPIs get cheaper bridge finance during spikes. The guardrails – time‑bound and transparent – prevent subsidy creep and moral hazard while rewarding disciplined behaviour that keeps cargo moving.

About the author

Hamed Zakikhani

Dr Hamed Zakikhani holds a PhD in Agronomy.

Topics

Australia Middle East Defence & security Trade & investment