Major Automotive Global Trends March 2026

Global

The Strait of Hormuz Crisis: The Global Automotive Industry is Headed for Complex Challenges

March was marked by the aftermath of the escalating Middle East war. As the crisis continued for most of the month, the near-total blockade of the Strait of Hormuz, the narrow waterway between Iran and the Arabian Peninsula that serves as a major shipping artery for global trade, has sent logistics costs soaring for automakers.

Data from Lloyd’s of London’s shipping information service reveals the extent of the impact. Between March 1 and 13, 2026, just 77 vessels passed through the strait, compared with 1,229 in the same period last year. The daily average has fallen from 138 ships to just 8, a drastic 94%. At the same time, Goldman Sachs estimates that oil flows through the strait have shrunk from a daily volume of 19 million barrels to just 600,000.

The situation has worsened due to concerns about Iranian mines being planted in the straits. Although the US military destroyed 16 vessels involved in this, the security threat has led to a "Soft closure" of the maritime route. A report by the research firm S&P Global notes that the risks in Hormuz have increased insurance costs for cargo and vessels because the strait is essential for transporting raw materials such as aluminum, petrochemicals, oil, and liquefied gas to and from the Gulf region. In the meantime, many cargo ships are forced to take a detour via the Cape of Good Hope in Africa - an additional 14 days of sailing that affects schedules and contracts.

The consequences are also evident in energy prices: Brent crude oil broke through the $100 mark in March and is approaching a five-year high. Since the conflict broke out on February 28, prices have risen by more than 40%, approaching $120 per barrel. Analysts note that logistics costs have jumped by 25%–30%. This is because the price adjustment mechanism in contracts with shipping companies is usually retroactive, which creates heavy cash flow pressure on logistics companies' systems. In addition, the surge will also make air (kerosene) and land (diesel) transportation more expensive.

Experts now point to three options facing automakers: cutting costs, diversifying suppliers, or hurting profitability. Some experts predict a focus on cost reduction, while others believe that an attempt will be made to pass on costs to suppliers and find suppliers that are geographically closer. Experts warn that an attempt to pass on costs to consumers will face difficulties due to falling demand and economic uncertainty.

The impact on automakers is not uniform. For German brands, for example, the Middle East is a key market for luxury models such as Bentley and Lamborghini. Other brands, such as BMW, import large quantities of aluminum from the region.

Chinese manufacturers are also particularly hard hit by their presence in Iran, with an estimated 60% market share, including vehicles assembled in the country and marketed under local names. The major Chinese manufacturers have been forced to reduce staff in the region, freeze new investments, and at the same time switch to a strategy of unloading at the ports of Oman and the United Arab Emirates and overland transportation, while accelerating the construction of assembly plants in Saudi Arabia and Egypt.

The automotive industry says the crisis is affecting the entire supply chain: the Middle East supplies 10% of the world's aluminum, 30% of helium (essential for chip production), and petrochemicals for plastic production. Analysts estimate that switching suppliers will inevitably increase costs, and as the shortage worsens, manufacturers are expected to prioritize the production of profitable premium models over cheap models, similar to the strategy adopted during the previous chip crisis.

Automakers suffered huge 75B$ losses due to the decline in demand for EV’s

The weakening of policies to promote EVs in the US and Europe, alongside continued consistent demand for internal combustion engines, cost global automakers at least $75 billion last year, according to new research published in March. The main source of the damage is the need to update strategies for the transition to EVs and return to the production of ICE vehicles, after they have already invested huge sums in converting factories and production facilities for an accelerated transition to EVs.

The main slowdown in demand was recorded immediately after the cancellation of tax breaks in the US, and at the same time, following the postponement of the ban on the marketing of vehicles with internal combustion engines in Europe. This sharp transition created "Dead stocks" of electrical components and forced an accelerated reorganization of production lines.

The change is also permeating luxury brands, considered the global industry’s technological leaders. Rolls-Royce, which had planned to transition to full electric by 2030, withdrew from the plan and decided to extend the life of its V12 engines because “Regulation and market conditions have changed.” Lamborghini also canceled the launch of its first electric model and shifted its focus to plug-in models, claiming that “It would be financially irresponsible to promote huge investments when customers are not ready.” Honda also updated its electrification plan for 2040 in recent weeks and canceled development of three low-cost electric models for North America, while writing off about $16 billion on infrastructure changes. General Motors (GM) reported a loss of $6 billion in its EV division and is diverting resources to producing pickup trucks with internal combustion engines at the expense of production plans for electric pickup trucks, while Stellantis is writing off about €22 billion due to the slowdown in demand.

Europe

The European Parliament succumbed to the truck manufacturer’s lobby and decided to ease CO2 emissions targets for HCVs

Another setback in the EU's tough "Green" policy; in March, the European Parliament approved a dramatic amendment to the regulations for calculating emission credits for heavy vehicles, which provides significant relief to truck manufacturers. Under the existing regulations, set at the beginning of the decade, manufacturers were required to reduce emissions from new trucks by 15% by 2025, by 45% by 2030, and by 90% by 2040 (compared to 2019 values). This was done through a massive transition to electric propulsion and by improving the efficiency of combustion engines.

The new amendment does not change the final emission reduction targets, but it does give manufacturers more flexibility in accumulating “Carbon credits” that can be used in later years. Until now, credits were calculated according to a “Linear reduction curve” that required constant annual improvement, for example, a target of about 20% in 2026 and about 26% in 2027. Now, this curve has been completely eliminated for the years 2025-2029.

The practical meaning is that the 15% reduction target from 2025 will be frozen, and a fixed limit will be applied until 2029. In other words, a manufacturer that achieves an 18% reduction in 2026 will be able to accumulate the extra 3% as a credit that will help it meet the stricter targets for 2030 and beyond. The move is a direct result of intensive lobbying by major companies in the industry, which approached the EU last October, demanding the abolition of the “Intermediate curve”.

The European Commission justified the move by citing a lack of charging infrastructure for electric trucks along the EU’s highways and claimed that the new mechanism could actually incentivize early adoption of zero-emission heavy-duty vehicles. On the other hand, environmental organizations warn that the move could lead to a drop in the market share of electric trucks in new registrations, from about 35% according to the forecast, to a range of only 18%–28% by the end of the decade.

The price of EVs in Europe drops for the first time in 5 years

 The average price of an electric car in the EU is on a downward trend for the first time since 2020. An analysis by environmental lobby group Transport & Environment (T&E), published in March, estimates that the European Commission’s emission reduction targets for passenger cars were the main factor, spurring manufacturers to launch more accessible and affordable models.

According to the data, the average price of an electric car in the EU will fall by around €1,800 in 2025 (a 4% drop) to €42,700. The significant news comes from the electric supermini (B) segment, where the average list price fell by 13%, thanks to models such as the Citroen e-C3 and Renault 5, which were launched in time to meet the original average emission reduction targets required in 2025. Recall that in the meantime, the targets have been "Softened" to an average calculation over 3 years between 2025 and 2027.

The current trend is the opposite of that recorded between 2020 and 2024, when the average price of EVs jumped by €5,000. In those years, manufacturers focused on profitable premium models, under the auspices of relatively low emission targets.

However, the report states that this year the market picture is changing. The VW Group has already announced a new line of popular models from the VW and CUPRA brands with a target price of approximately 25 thousand euros. While electric models in the large segments (D, E) have already reached price parity with equivalent gasoline models in 2024. For the small models, this is expected to happen only in 2030. The report warns that weakening the 2030 targets could reduce the market share of EVs from 57% to only 32%, which will delay their accessibility to the general public.

The Industrial Accelerator Act (IAA) is officially revealed: Europe faces penetration from the Chinese market

In March, the EU's Industry Commissioner unveiled the EU's Industrial Accelerator Act (IAA). It is an ambitious strategy aimed at boosting domestic production, reducing economic dependence on the US and China, strengthening the continent's industrial base, and creating new jobs in strategic sectors such as steel, aluminum, cars, and green technologies.

According to the publication, the law sets a target of increasing the manufacturing share of European GDP to 20% by 2035 (up from 14.3% in 2024), while protecting the industry from unfair global competition. Foreign investments exceeding €100 million in sectors where a third country (such as China) controls more than 40% of global production capacity will be subject to stricter conditions: investors will be required to ensure that at least 50% of the workers are local.

The revolution in the automotive supply chain is due to the Made in EU directives for EVs, which will apply not only to production but also to batteries. In the first phase of the implementation of the scheme, which will last about two years, it will be possible to assemble batteries within the EU using cells imported from Asia and still consider them “Made in Europe”. However, from the third year onwards, both battery cells and cathode materials will have to come from the EU.

Opinions in the industry are divided over the move: While the CEOs of VW and Stellantis called in a public letter for a CO2 bonus to be granted to vehicles manufactured in Europe, German luxury brands fear that such a move would ignite a trade conflict with China. The EU's Industry Commissioner concluded that this is a historic step to update the European economic doctrine. From the official information presented, it appears that the IAA law places the European automotive industry at the center stage, with direct effects on manufacturers and suppliers, the central ones of which include:

• Stricter sourcing requirements for EVs: To benefit from subsidies or participate in government fleet tenders, car models will have to meet European assembly requirements. Around 70% of the monetary value of their components (non-battery) will have to be of European origin, and sourcing requirements for batteries will be gradually tightened over 3 years.
• “Shield” against foreign ownership: The law allows EU countries to limit foreign ownership to just 49% in strategic companies, including car companies, and to require technology transfer and local job creation as a condition for approving EU investments.
• Shift to “Low-carbon” raw materials: From January 2029, car manufacturers will have to demonstrate the use of a minimum of steel (25%) and aluminum (25%), produced in low-carbon processes in Europe, for publicly funded projects.
• Improving the competitiveness of local suppliers: The law is intended to halt the decline in profitability of European automotive suppliers (which has plummeted in recent years) by creating a “secure market” for products manufactured on the continent.
• Strict sourcing requirements for batteries. The IAA law’s timetable is divided into phases in order to allow the industry to set up battery factories (Gigafactories) on European soil before the requirements are tightened.

The sourcing requirements for EV batteries presented in March include two main phases:

During the entry into force phase (6 months from the approval of the law), around mid-2027 according to the forecast, a number of conditions will apply to vehicles in order to be eligible for government subsidies or to be able to participate in public fleet tenders. At the same time, a “Final assembly obligation” will apply, meaning that the vehicle will be required to undergo final assembly within the European Union.

In the second phase, sourcing requirements will apply to the battery, divided into two time periods. In the first time period (2027-2028), in order for an electric vehicle to qualify for incentives in Europe, its battery will have to include at least three key components, manufactured in Europe, from a defined list. The common components to choose from at this stage are the battery pack, the battery management system (BMS), and cooling and thermal systems.

In 2030, the requirements are expected to become significantly stricter, and in order for an electric vehicle to be considered "Eligible," its battery will need to include at least five key components manufactured in Europe, including the battery cells, which must be manufactured in Europe (and not just the assembly of the case). Active materials in the cathode will require the establishment of chemical processing plants on the continent, and battery management systems with European "Technological sovereignty" over the software and chips.

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USA

The Federal Reserve keeps the interest rate unchanged, but tension with Iran makes car purchases in the US more expensive

Car payments in the US continue to climb, while the conflict with Iran is driving up oil prices and weighing on purchasing costs. Against this backdrop, the Federal Open Market Committee (FOMC) announced in March that it would leave the target for the base interest rate unchanged, in a range of 3.5%-3.75%. Despite a previous reduction of 25 basis points in December, the Federal Reserve remains cautious, given economic uncertainty and the escalation in the Middle East.

According to data from the research firm Edmonds, the average monthly payment for a new car loan reached $775 in February, compared to $743 in the same period last year. The average interest rate is 7%, with the average car loan amount approaching $44,000

In the used car market, the situation is similar, with an average monthly payment of $560 and a double-digit interest rate of 10.9%. Analysts claim that consumers do not feel any real savings despite interest rate reductions and that rising car prices neutralize the marginal benefits of monetary policy. In addition, as long as oil prices remain high for a long time, the Fed may even consider raising interest rates again to curb inflationary pressures, which will further worsen the situation for buyers.

Meanwhile, car prices in the US are also being boosted by the heavy tariffs imposed by the Trump administration on imported cars and parts. Studies published in March show that the tariffs imposed by the Trump administration are adding up to a combined loss of $35 billion for global car manufacturers, some of which is also being passed on to car prices for end consumers.

Since the imposition of the massive tariffs in April 2025, the global auto industry has experienced an unprecedented cost shock, causing manufacturers to lose at least $35.4 billion in direct losses.

Research firm AlixPartners notes that "The US administration's inconsistency on tariffs makes it difficult to make long-term decisions about supply chains. Manufacturers are forced to choose between absorbing costs, raising prices, or moving production to the US. Currently, most companies have chosen to absorb the costs in order to remain competitive, but the data shows that cost pressures are already beginning to be passed on to the consumer: prices of models imported from Japan, Germany, and Mexico have risen significantly more than models manufactured within the US”.

The Trump administration intensifies the struggle with California car regulations and sues the state of California's environmental regulator

In recent months, there has been a high-profile power struggle over vehicle emissions regulations in the United States between the Trump administration and the state of California, which refuses to yield to the administration’s lenient emissions policies. In March, the administration escalated the struggle when it filed a lawsuit against the California Air Resources Board (CARB). The move was intended to block California’s attempts to enforce independent emissions standards, which are significantly stricter than the nationwide federal regulations.

The administration claims that the state does not have the legal authority to set its own standards. “Restrictive and expensive mandates for electric vehicles inflate costs for the American consumer and violate federal law,” stated the attorney general who filed the lawsuit. At the same time, Trump again attacked California’s gas prices (which are the highest in the United States), attributing them directly to the state’s taxes and environmental regulations.

It should be noted that California, traditionally controlled by Democrats, has frequently clashed with the policies of the Trump administration. The state has been implementing strict environmental regulations for decades, which have led to one of the highest adoption rates of EVs in the US. However, this "Independent" approach has become a constant source of friction with the White House.

Last summer, the administration blocked California's ban on the sale of new internal combustion vehicles starting in 2035, along with limits on emissions from private cars and trucks (nitrogen oxides). The governor of California responded with a counterattack and, together with 10 other states, filed lawsuits against the administration's decisions.

Once again, he sharply criticized the administration's decision, claiming that the timing of the new lawsuit coincides with the rise in gas prices following the conflict with Iran, a situation that is pushing many drivers in the country to consider switching to EVs. "Gas prices are soaring because of Trump's reckless election, and he chooses to attack California for trying to provide its residents with freedom of choice and cheaper options." In the week of March 3, the average gas price in California was $5.37 per gallon, compared to just $3.60 for the national average.

South Korea

Chinese-made cars conquered 34% of the South Korean auto market, at the expense of local manufacturers

South Korean media reports that the Korean auto industry’s position weakened in early 2026 due to a combination of Chinese vehicle penetration and a sharp decline in exports. The market share of Chinese-made EVs in Korea jumped to 34% last year, compared to only about 1% in 2021, while Korean EV exports to the US fell by 87%.

This phenomenon includes not only models from Chinese brands, but also large quantities of Tesla vehicles, which are manufactured in Shanghai, and Western brands, which are manufactured in China. For example, about 59,000 Chinese-made Tesla units were sold in Korea last year.

On the other hand, the Korean export environment is in decline due to tariff barriers and the elimination of subsidies in the US. Although Hyundai and Kia sales in the US declined at a relatively moderate rate (approximately 20,000 units), this is mainly due to a shift to local production in the new factories in North America, as a substitute for exports from the factories in Korea. The result, a decrease in capacity utilization in local factories, is expected to directly affect Korean component suppliers, primarily battery manufacturers, who find it difficult to compete with the Chinese, who benefit from low labor and electricity costs and government subsidies in China, and at the same time receive purchase subsidies in Korea.

China

China's new Five-Year Plan sets stricter environmental targets for the Chinese auto industry  

In early March 2026, China opened the fourth session of the 14th National People's Congress in Beijing. During the session, the Chinese premier reviewed the country's economic performance in 2025 and presented a roadmap for industrial development at the beginning of the next national planning cycle. Among the sectors highlighted were automobiles, smart manufacturing, new energy technologies, and emerging industries (areas seen as essential for maintaining China's economic transformation in the long term).

According to the report, China's gross domestic product (GDP) grew by 5% in 2025 to reach about 14 trillion yuan. Meanwhile, the automotive sector stood out as one of the strongest contributors to growth. The report specifically noted the annual production of new energy vehicles (NEVs, electric, hybrid, and plug-in) that exceeded 16 million units. The supporting infrastructure has also expanded rapidly: the number of public charging facilities for EVs nationwide has exceeded 20 million units. The Chinese government's new five-year plan (the 15th in number), for the years 2026–2030, includes several directions for development in the automotive sector, primarily increasing demand and accelerating transformation: the government plans to allocate 250 billion yuan in special very long-term bonds to support trade-in programs for consumers, which will replace polluting vehicles with reduced-emission vehicles.

Another 200 billion yuan will be allocated for large-scale equipment upgrades in factories. The report calls for the deep implementation of the "AI+" strategy, which aims to integrate artificial intelligence into all industries, including the automotive industry. The plans include the establishment of intelligent computing clusters and public cloud infrastructure, which will support the training of algorithms for autonomous driving and smart manufacturing.

In the environmental sphere, the government has set a target to reduce carbon emissions per unit of GDP by 3.8% by 2026. These measures include expanding smart grids and energy storage technologies, which will strengthen the sustainability of EVs and support technologies such as V2G (vehicle-to-grid). At the same time, stricter supervision of energy- and emissions-intensive projects is expected to further push traditional automakers towards electrification and low-carbon production.

China’s hydrogen propulsion strategy: a target of 100 thousand vehicles by 2030

China is accelerating the commercial application of hydrogen-based propulsion and is setting a goal of 100,000 fuel cell EVs (FCEVs) on the country's roads by the end of the decade. In March, China’s Ministry of Industry and Information Technology issued a policy aimed at lowering the average price of hydrogen for end consumers to below 25 yuan (about $3.6) per kilogram, and in some areas even to 15 yuan.

To drive the green transition, the central government is offering incentives of up to 1.6 billion yuan (about $220 million) to each “City cluster” that opens up a complete supply chain (from production and storage to transportation and use). Although it is currently a small niche market, producing only hundreds of units per month, the government is also encouraging a shift to hydrogen in heavy industries. The strategy is intended to establish hydrogen as a new economic growth engine and support the green transformation of the economy, while laying the technological infrastructure for electrolyzers and advanced storage equipment.

Japan

The war in Iran damaged the Japanese auto industry’s supply chain in particular: manufacturers are seeking solutions

The geopolitical conflicts in the Middle East have dealt a severe blow to the Japanese auto industry’s supply chain. The de facto blockade of the Straits of Hormuz and Bab al-Mandab has exposed the cracks in the global network of Japanese automakers, which are caught between a logistical stalemate and a shortage of raw materials.

The immediate result on the ground, as of March, is severe disruptions in the logistics of export production lines and delays in deliveries, resulting from the crisis in international shipping. On the other hand, shipments of core models already manufactured for Middle Eastern markets have stopped completely, leaving large amounts of idle inventory.

Analysts in Japan estimate that if the conflict continues until the end of April 2026, the production cut in the two-month period will double or more. This is a significant blow to one of the world’s fastest-growing and most profitable markets.

According to S&P Global Mobility, Japanese automakers sold more than 870,000 new vehicles in 2025 in 10 Middle Eastern countries, including the United Arab Emirates and Iran. This figure represents a market share of about 30% in these countries combined. However, this model relies heavily on seaborne exports, which are particularly vulnerable in a scenario of factory closures. Japanese automakers have very few local assembly bases in the Middle East, and blocking any major shipping lane immediately blocks exports.

It should be noted that the Strait of Hormuz is not only a major oil transit route but also a vital artery for Japanese cars destined for the Middle East. Under normal conditions, 10 to 15 car carriers leave Japan each month with an average capacity of 5,000 vehicles per ship. The port of Dammam in Saudi Arabia is the main unloading point for these vehicles. However, recent data shows that about 15 vehicle transport ships are stranded in the Gulf area, unable to move, including several ships bound for Japan. Japanese shipping companies have completely suspended the passage of ships through the Strait of Hormuz.

It should be noted that in theory, the Japanese vehicle fleet could bypass the blockade through the port of Jeddah in Saudi Arabia, which is the largest port on the Red Sea coast. However, this "Escape route" is also unsafe due to the ongoing attacks by the Houthis, who have turned the Bab al-Mandab Strait into another "Death trap." Japanese shipping companies have long blocked the passage through this route as well, creating a dead end: there is no access to major shipping lanes, vehicles cannot be shipped, and Japanese manufacturers have no choice but to reduce production.

Another crisis is the supply of raw materials, and it also affects the industry. The Japanese are currently facing widespread shortages, from basic chemical raw materials to materials for the production of key automotive parts. The main and immediate problem is the disruption of the supply of naphtha from the Middle East. It is a major byproduct of petroleum refining, which is a critical raw material for the production of ethylene, which itself forms the basis for the production of core automotive components such as plastics and synthetic rubber.

One of the main suppliers of the material in Japan, Mitsubishi Chemical Group, already issued a warning on March 17 that it intends to raise prices for a number of plastic and related products due to difficulties in importing naphtha from the Middle East.

Another critical raw material is butadiene, which is the main component in the production of synthetic rubber for the production of tires, among other things. It is a byproduct of ethylene production, and a decrease in ethylene production will directly lead to a shortage of synthetic rubber, which will cause a shortage of tires, various rubber seals, and shock absorbers.

Global tire giants have already set up emergency teams, which are "Closely monitoring" developments. For example, Japanese tire manufacturer Yokohama announced that it is examining all possible solutions, including replacing raw materials. But industry experts note that obtaining such substitutes for raw materials is not easy at all. Japan estimates that raw material substitution is “Extremely difficult,” given the complexity of costs and supply chain networks.

Based on current raw material inventory levels, if the conflict in the Middle East continues to escalate, the global market is expected to see a significant increase in tire prices within a few weeks. This price pressure will not only weigh on Japanese automakers but will ultimately be passed on to consumers around the world, raising the overall cost of owning and maintaining a vehicle.

Analysts estimate that the storm in the chain will accelerate processes of change, which the Japanese auto industry has been debating for some time. For example, expansion of regional production capacity is expected, mainly in the Middle East and neighboring regions, which are sensitive to disruptions in maritime shipping. Japanese manufacturers will examine the allocation of production capacity in Southeast Asia, the Middle East, and other stable regions, accelerate the construction of assembly plants, and reduce dependence on a single shipping route.

In addition to optimizing logistics routes, the Japanese are expected to diversify the procurement channels of key raw materials. Automakers and chemical companies in the supply chain are expected to increase the procurement of naphtha and chemical raw materials from regions outside the Middle East and accelerate the research and development of new alternative materials. The Japanese auto industry's insurance and maritime logistics system is also expected to undergo changes as a result of the crisis. Leading shipping companies and automakers are expected to collaborate on developing risk hedging solutions, such as opening safer Arctic shipping lanes, establishing regional logistics hubs, and insurance coverage of high-risk routes, through innovation to reduce logistics losses caused by geopolitical conflicts.

India

Restrictions on natural gas threaten the assembly lines

The Indian automotive industry, which recently began a momentum towards expanding global exports, is currently facing short-term production disruptions due to a shortage of industrial natural gas supplies, resulting from the turmoil in the global energy market. A report by investment firm Axis Direct, published two weeks after the outbreak of the war, warns that supply constraints could destabilize the domestic industry in the coming weeks.

On March 9, after the trend in the energy market became clear, the Indian government imposed an emergency order, imposing quotas on gas consumption. Under the new regulations, gas supplies to industrial users connected to the national grid will be limited to 80% of their average consumption.

The restrictions are already showing their signs in key processes in the domestic automotive industry, such as paint shops and forging operations, which rely on gas for heating.

However, analysts estimate that the event is “Manageable” at this stage. Most Indian automakers hold enough inventory for three to five weeks, which constitutes a temporary “Safety cushion.” The immediate result for customers in the meantime is likely to be minor delays in delivery rather than order cancellations.

To overcome Due to the shortage, some manufacturers are considering switching to using liquefied natural gas (LNG) or alternative fuels, a move that is expected to increase production costs by 15% to 25%.

Israel

Following the war with Iran, there was a sharp jump in transportation, insurance, and fuel prices, and significant delays in shipping

The war in Iran has been affecting the prices and availability of vehicle transport by dedicated ships throughout March, especially on routes from East Asia to Europe and the Mediterranean basin. This is according to reports in the international logistics press, during the month of March. According to reports, since the de facto closure of the Strait of Hormuz in early March, the trade routes of RoRo ships (roll-on-roll-off-ship) from the Far East to Europe and Mediterranean ports have been experiencing extreme volatility.

Shipping rates and costs for vehicles by roller-coaster have skyrocketed due to a combination of route changes, new levies, and a surge in global oil prices. One notable change is the complete avoidance by most vessels from the Far East (China, Japan, Korea) of entering the Persian Gulf and calling at the major trading ports in the Emirates, which were once a hub for cargo for the entire Middle East.

In addition, most shipping companies are completely avoiding the Red Sea and the Suez Canal, including companies that had already begun shipping vehicles on these routes after the previous lull in Houthi attacks. The rerouting of shipping routes via the Cape of Good Hope adds 10–14 days of sailing to European ports and significantly increases the cost of transporting each vehicle. It was also reported during the month that most international shipping companies have imposed “Emergency risk surcharges” ranging from $150 to $400 per vehicle, depending on the proximity of the shipping destination to the conflict zone. It should be noted that this additional rate also applies to the transportation of vehicles (and general merchandise) in containers, which last year became an important means of transport from the East to Europe and Mediterranean ports. The average price of transporting a 40-foot container has increased to nearly $2,000 on average.

According to reports, insurance is currently the most volatile component of the total shipping cost due to the imposition of particularly high war risk premiums on ships that pass near the combat zone. Some premiums have increased by 50% or more since the start of the war and amount to millions of dollars per shipment. At the same time, some insurers have completely stopped providing “War risk” coverage to ships in the Persian Gulf, forcing shipowners to seek out specially designated and particularly expensive premiums.

The war also sparked a “Fuel price shock,” which directly affected the operating costs of all merchant fleets and RoRo ships in particular. The new surge in diesel prices is now being passed on directly from shipowners to shipping companies that charter the ships and from there to end customers. As of the end of March, this represents an increase of over 30% in fuel costs.

In addition, shipping companies have sharply revised their fuel surcharges (BAF). According to reports, the fuel component alone in shipping costs is 15%–25% higher as of the end of March than it was in January 2026. According to reports, the main challenge currently in shipping vehicles from the Far East is predictability, as estimated arrival times (ETAs) are unstable.