UAE Retailers Charter Ships as Hormuz Closure Drives Up Freight Costs

Retailers are now running their own shipping

Seven months after the Strait of Hormuz closed, the UAE's biggest food retailers have stopped waiting for normal container service to come back. Many now arrange the shipping themselves. In early October, Lulu Group International said it now charters whole vessels for its own cargo from India, Thailand, China, Indonesia, Spain, Turkey and Italy. Before, its orders travelled alongside other companies' cargo.12 Shamin Sainulabdeen, Lulu's director of private labels, said sea shipments had in some cases taken as long as 70 days. That is a serious problem for short-shelf-life goods in a country that imports about 80 per cent of its food.11 He summed up the approach this way: "We are not waiting for this [situation] to get corrected. We made our own supply chain."12

Lulu is not alone. Oil and ghee maker United Foods placed large raw-material orders months ahead. Its B2B senior manager said bulk deliveries can last up to five months.12 Al Ain Farms Group has leaned harder on domestic production and argues that a "made in the UAE" label now carries extra value with shoppers.11 The firms also credited the government for staying closely involved. Officials reportedly call manufacturers to ask whether they are having trouble receiving goods.12

On the surface this is a story of corporate adaptability. Underneath, it shows something more lasting: Gulf-bound freight has split from the wider container market, and the import economy is reorganising around that split.

How the crisis built up

The disruption started when the US-Israel-Iran war broke out on February 28, 2026. It cut off ship traffic through Hormuz for goods and energy alike.21 The early weeks were close to an emergency. Kuehne + Nagel chief executive Stefan Paul warned that Dubai might have only about ten days of fresh food left. He said air freight capacity into the Middle East had fallen roughly 22 per cent, and Jebel Ali operations had been partly suspended.14 Iran, the UAE's top source of fresh fruit and vegetables, banned all food exports. Brazilian poultry exporters briefly stopped bookings to the region.20

Lulu's first answer was air freight. In March it flew in about 80 tonnes of produce at a time on Etihad freighters from India.14 One estimate put chartered air cargo at about $3 to $3.5 per kilogram, roughly three times the cost of sea freight. The government was reportedly covering the extra cost to keep shelf prices steady.17 By April, Lulu's chairman said the group had brought in more than 5,000 tonnes of food on 26 chartered flights and cargo vessels.19

Other retailers took different routes. Spinneys combined air freight, ports on the UAE's east coast and cargo landed at Jeddah.15 It also looked at a 7,000km road route from London to Dubai that takes about 15 days.16 Choithrams said goods unloaded in Oman or on the east coast cost 7 to 20 per cent more because of war surcharges. It also said it was sharing shipments with other retailers to keep volumes up.16

The new step is the move from emergency airlifts to dedicated ocean charters. Air freight bridges a gap. Chartering ships is a bet that the disruption will last long enough to justify building parallel logistics.

How much costs have risen: the estimates disagree

Estimates of the cost increase vary widely, and the gaps matter. Retail executives quoted in September gave the most dramatic figures. Danube Group vice chairman Anis Sajan said a shipment that used to cost $1,000 now costs $10,000 to $12,000 and could reach $15,000. He said transit times had stretched from 25 days to 60, sometimes 90.21 A tradeX Link executive gave lower numbers: 40-foot high-cube rates up from about $2,000 to quotes of $7,000-$11,000, a rise of 250 to 450 per cent. She expects a further 5-15 per cent increase in peak weeks.21

The UAE's National Shipping and Logistics Committee put the overall rise at 300 to 500 per cent in early October. It added an important qualification: the base sea freight rate has not risen that much. Most of the increase comes from war-risk charges, emergency conflict fees, emergency fuel surcharges, land transport and clearance costs.27 Earlier carrier data supports this. In March, Maersk, Hapag-Lloyd and CMA CGM added war-risk surcharges of $1,500 to $3,000 per 40-foot container, and MSC suspended Middle East bookings altogether.25

The committee's breakdown is the most useful way to read the numbers. A tenfold rise is believable for some door-to-door moves into the Gulf. But the drivers are the extra costs of rerouting, insurance and trucking, not a jump in ocean freight as such. That matters because those costs would ease quickly if the strait reopened. Casa Milano's Azhar Sajan expects rates to return to pre-war levels within a few months of the conflict ending.21 The committee also stressed that space is a problem, not just price. Some sailings are full, others are cancelled, and cargo is often pushed to later voyages.27 Chartering a ship solves exactly that problem. If you control the vessel, you are not competing for scarce slots.

The UAE is out of step with global freight

Gulf rates remain at their peak while the global container market is heading the other way on key routes. Drewry's World Container Index stood at $4,434 per 40-foot container on October 1. Shanghai–Rotterdam had fallen for 12 weeks in a row.3 By the following week the index had slipped another 2 per cent, helped by Golden Week and more services returning through Suez.7 Asia–Europe has gained capacity since MSC and Maersk announced selected Red Sea returns in late August and early September. Neither carrier has announced a broad return of its East–West network.2

The transpacific route is the exception. Shanghai–New York passed $10,000 per container.3 Xeneta data showed US East Coast spot rates up more than threefold since the Middle East conflict began.9 In late September, Bloomberg reported that the Iran war was pushing up fuel costs and that the Shanghai Containerized Freight Index had hit its highest level since July 2024.6 So the war affects the global market mainly through bunker prices. For the Gulf, it acts as a physical blockade. The UAE committee's statement that Gulf rates "have not yet decreased" contrasts sharply with falling Asia–Europe benchmarks.27

Port strikes added congestion elsewhere

Labour disputes in Europe made the picture worse over the summer. A nationwide Dutch port strike was set for September 4. At the time, Rotterdam and Antwerp yard utilisation was regularly above 90 per cent, and schedule reliability on some transatlantic services had dropped as low as 28 per cent.8 C.H. Robinson's ocean procurement director said European strikes made it harder for carriers to shift ships to US routes, which helped keep those rates high.9 A threatened German port strike was another worry in September.1 It was resolved in early October when ver.di accepted a 12-month wage offer covering about 11,000 port workers, subject to employer approval.7

These strikes do not directly cause the Gulf's problems. They do matter for UAE importers who are switching to European and Asian suppliers, because any loss of global capacity makes it harder to find spare ships. Asian port congestion is a larger factor. Around Shanghai and Ningbo, 136 vessels were waiting, carrying almost 860,000 TEU.7

Where consumers feel it

Government controls and stockpiles have kept shelves full, but prices have still risen. Dubai inflation hit 5.5 per cent in May, driven by fuel, transport and imported food.18 Spinneys said it had held some prices flat and absorbed some cost increases. It also admitted to "temporary gaps" in certain products.18 Viva Supermarket's chief executive pointed to port congestion, ship diversions and longer clearance times, along with sharply higher freight costs.18 One importer estimated that freight increases add $5 to $9 to each item in a typical container.21 Food sector executives say inflation usually hits perishables first and then spreads more widely as the range of products on offer shrinks.28

The import-dependence figure also varies between reports. The National cites roughly 80 per cent, while other coverage says close to 90 per cent.1220 On either number, the system has no slack.

What it means

The charter strategy favours scale. Only a group as large as Lulu, with stores in every GCC country, can fill an entire ship from Spain or Indonesia.12 Smaller retailers and restaurants are left sharing space at war-surcharge prices. Over time this could push the UAE's grocery market toward bigger players, though none of the coverage measures that yet.

The more important point is that some of these changes will probably remain after the strait reopens. Analysts warned early that a long disruption would permanently restructure supply chains and make the Gulf a more expensive market to serve.15 Spinneys expects insurance and freight markets to stay high even after a lasting reopening.18 Retailers have spent seven months moving suppliers closer, building up stock and investing in local production. Those decisions are hard to undo. Freight surcharges will eventually come down. The new focus on keeping inventory close to home and shortening supply routes is likely to last.