Business entities using the Mombasa port are holding onto hope that the Israel-Iran war will not escalate into a damaging disruption of global business.
The immediate sign of problems from the conflict that started on Friday, after Israel attacked Iran, was that flights were diverted.
Then there is the threat by Iran to block the Strait of Hormuz, a critical maritime choke point for global oil supplies, which borders Iran, Oman and the United Arab Emirates. The strait links the Persian Gulf to the Gulf of Oman and the Arabian Sea, and 20 per cent of the world trade passes through it.
For the Eastern Africa coast, the threat could expand if Houthis in Yemeni resume their strikes in support of Iran. Their earlier strikes nearly halted the flow of commerce in the Red Sea.
Importers say higher insurance costs are to be expected as a result of the ongoing conflicts in the Middle East. This will directly lead to increased cost of goods. Exports are also expected to pile up in warehouses due to delayed ship schedules.
According to Kenyan maritime expert Andrew Mwangura, any disruption could trigger a global oil shock, significantly raising energy prices even in countries not directly reliant on Gulf oil exports.
“Shipping groups are starting to shy away from the Strait of Hormuz as the Israel-Iran conflict rages on. The strait is a critical gateway to the world’s oil industry and a vital entry point for container ships calling at Dubai’s Jebel Ali Port; this will result in high sea freight charges,” said Mr Mwangura.
He added: “The Strait of Hormuz is also key for global trade for ports in this region (Jebel Ali and Khor Fakkan), which are transshipment hubs. They serve as intermediary points in global shipping networks and as hubs for the movement of freight, with feeder services in the Persian Gulf, South Asia and East Africa.”
Mr Agayo Ogambi, the Shippers Council of Eastern Africa chief executive officer, said closure of the Red Sea route as a result of ongoing conflicts will lead to spikes in oil prices. This could in turn lead to increased costs of food, transport and fertiliser.
“With escalation of war in the Middle East, we anticipate more trouble for shipment, longer transit time, freight costs and insurance increase. This will affect the shelf life and competitiveness of our exports,” said Mr Ogambi.
Shipping lines have been avoiding the Red Sea and taking longer routes to avoid attacks by the Iran-backed Houthi.
Mr Ogambi said Kenya’s ports of Mombasa and Lamu, which serve as crucial entry points for goods destined for landlocked East African countries, are likely to face reduced traffic and altered shipping patterns.
“The rerouting of vessels around Africa’s southern cape increases shipping costs and delivery times for imports essential to Kenya’s economy, from manufactured goods to raw materials. During periods of heightened security threats, freight rates and crew wages often rise, creating an economic incentive for some to take the risk of passing through conflict zones,” said Mr Ogambi.
Trade between Kenya and Iran has been booming in the past five years, mostly involving Kenya’s tea exports.
As Iran is under United States sanctions, an earlier oil deal between Kenya and Iran was stalled after Washington threatened to punish anyone buying its oil. Iran, however, is allowed to sell oil for food or medical supplies.
