Iran Conflict Could Send Shockwaves Through Europe’s Road Transport Sector

TABLE OF CONTENTS

Oil Price Surge and Fuel Costs

Any political turmoil in the Middle East, not to mention a military one, is bound to increase the price of oil, which then is reflected in price hikes at the fuel stations. This time around, things escalated even further. Iran effectively closed the Strait of Hormuz threatening to attack enemy vessels passing through it. This, together with the insurance firms’ decision to increase premiums for operations in the Middle East, effectively closed the strait for maritime travel. One must remember that the Strait of Hormuz handles a significant share of global oil and gas shipments. It is estimated that 20% of global oil passes through the strait. Gulf countries like the United Arab Emirates, Saudi Arabia, Kuwait and Iraq (as well as Iran itself) are all top oil as well as natural gas producers.

As a result, in the first week of the conflict the price of oil went up from around 73 USD to 89 USD per barrel. The second week of the war started with the oil price skyrocketing to well over 100 USD per barrel, scratching the 120 USD level seen back in 2022 after the Russian invasion of Ukraine. And this is only the second week of the conflict, with no military victory nor political solution seen on the horizon….

The war’s impact on energy markets has contributed to the growth of fuel prices in Europe. And this is even before the impact of the war has affected supplies as it is still the „old” fuel in stock that has gone up. It takes about 2-3 weeks for the effect of shortages to be seen on the displays at the pump.

Oil price hikes directly affects road transport operators, where fuel is a major cost component estimated at up to 40% of the total operating cost of the road carriers. The increase in freight and fuel costs filters into transport budgets across the continent, straining profit margins for European hauliers and logistics providers. Especially the carriers across Europe are running on thin margins and the fuel hikes will be tightening the noose around their neck. The price increases at the pump are not immediately and proportionately reflected in contracts and freight rates. So it might take weeks of operating at low profitability levels or at a loss before the carriers are able to catch some breath.

Wider Economic Effects

The oil price hike is also a threat not only to the logistics sector but also the wider economy. Higher diesel prices increase the cost of road haulage, which then leads to higher prices for transported goods, particularly food and consumer products. This is exactly what we have seen after the Russian invasion of Ukraine, which led to high inflation in 2022-23 across Europe and an economic slowdown the continent still hasn’t recovered from.

And let’s not forget about LNG – the „other” fuel stemming from the Middle East. Europe has increased its imports of gas from the region, especially after the conflict in Ukraine and ban on Russian gas. Now the blockade of the Persian Gulf is likely to affect gas-powered fleets, energy-intensive logistics operations (warehouses, cold storage) as well as industrial production of which gas is an essential element. And lower and more expensive production means lower freight volumes for carriers and forwarders and shattered hopes of industrial revival in Europe.

Beyond oil and gas, the Middle East is integral to supply chains for petrochemicals, fertilizers, and certain industrial inputs. Disruptions could trigger shortages or price fluctuations for these materials used in European manufacturing, thus further affecting its output. The European automotive sector is one that heavily relies on supplies of electronics and semi-conductors, petrochemical based products and specialty chemicals all in one way or another dependent either on global supply chains, be it via direct product supplies or resource deliveries.

Maritime Transport Disruptions

The effect of the Iranian conflict is not limited to road transport via fuel price hikes. Other means of freight operations globally are bound to bear the consequences of US and Israel’s military endeavour too.

Ocean shipping, responsible for 90% of global trade volume, is looking with concern at the events in the Persian Gulf. Container ships have been forced to avoid the area due to safety risks and war-risk insurance concerns. With Dubai Port being the ninth largest in the world – that is a significant market loss for many exporters globally.

Furthermore, the on-going conflict yet again puts the strain on the Red Sea/Suez Canal route. In the last two years the maritime corridor was avoided by the majority of global ocean liners due to the threat of Houthi militia in Yemen. Although recent weeks saw many liners return, test or consider returning to the Canal, these hopes could be dashed by the latest eruption of the conflict. Few liners will risk sailing past the strategic Bab al Mandab Strait (the gateway to the Red Sea and the Suez Canal) right next to the Houthi controlled parts of Yemen. Which means liners will continue travelling the longer route around Cape of Good Hope keeping travel costs elevated in comparison to the shorter Egyptian route.

European ports thus might soon be facing operational challenges such as irregular vessel arrivals, sudden surges in container volumes, equipment imbalances (including shortages of empty containers), and potential periods of congestion. These disruptions have a directl effect on road freight transport, as trucking operations rely on predictable and stable container flows. When maritime schedules become irregular, trucks often experience longer waiting times at ports, which reduces their productivity because fewer trips can be completed each day. In addition, companies may incur higher demurrage and detention charges, while intermodal operators face planning inefficiencies due to the uncertainty surrounding cargo availability and port operations.

Air Freight Challenges

Air transport is also expected to take a serious hit due to the latest Gulf crisis. Especially considering the importance of Dubai and Qatar hubs for air operations. One must not forget that the air space over Russia is already closed or limited to some operators, which also serious limits the choice of air routes from Europe to the Far East. Airspace closures across parts of the Middle East — including the UAE, Qatar, Kuwait, and Iran — have already disrupted air cargo operations, which are vital for high-value and time-sensitive goods like electronics and pharmaceuticals. Reduced cargo flights and rerouted air routes increase costs and extend transit times for global air freight.

Impact on Just-in-Time Manufacturing

These issues have a particularly strong effect on just-in-time manufacturing systems. Because these production systems depend on precise and reliable supply chains, delays in maritime or air transport can quickly cascade into factory operations. Manufacturers in Germany and Central Europe depend on smooth inbound cargo flows through major gateways such as the Port of Rotterdam and the Port of Hamburg. When disruptions occur at these ports, the effects quickly spread inland, creating bottlenecks in road transport networks and complicating logistics operations throughout the region.

Normally, if critical parts fail to arrive on schedule, production lines may slow down or stop entirely, companies are forced to rely on emergency air freight to maintain production, which significantly increases costs. Now if the air transport is also not available, they are facing a standstill. Truck transport volumes can fluctuate unpredictably, while demand for warehousing may surge as companies attempt to build safety stock to protect themselves from further disruptions.

Mitigation Strategies

To mitigate the uncertainty created by the latest Iran conflict, many European firms may move away from strict just-in-time supply chains toward more resilient “just-in-case” strategies. Which many have been doing for years now since the pandemic supply chain crises. This involves increasing buffer inventories to ensure production can continue even if shipments are delayed, diversifying suppliers to reduce dependence on single regions, nearshoring part of their production closer to European markets, and maintaining strategic reserves of critical raw materials and components. These adjustments can improve supply-chain resilience but also reshape logistics patterns across Europe.

In the short term, such strategies are likely to increase warehousing and distribution activity, as companies store larger inventories and move goods more frequently between storage facilities and production sites. This may lead to more domestic truck movements and greater demand for regional transport services.

Over the longer term, supply chains could become more regionalized and less globalised. That means reducing reliance on long-haul imports and increasing intra-European freight flows instead. While these changes can improve stability, they also come with economic costs: building larger inventories ties up capital and raises storage expenses, which can contribute to broader inflationary pressures.

Role of Digital Freight Platforms

Digital freight platforms like CargoON can be very helpful to carriers in this time of crisis. When conflicts disturb trade routes, increase energy price volatility, or disrupt maritime transport, road freight markets often face unpredictable demand, capacity shortages, and operational uncertainty. Digital platforms help reduce these challenges by improving transparency, flexibility, and efficiency across logistics networks.

One major advantage is better access to transport capacity. CargoON connects shippers, forwarders, and carriers within a large ecosystem of verified transport companies across Europe. This enables logistics operators to quickly find alternative carriers or secure additional capacity when freight flows change.

Another key benefit is improved visibility and coordination of transport operations. Tools such as real-time shipment tracking, automated freight allocation, and centralized communication help companies monitor delays and respond quickly to disruptions. This is especially important during geopolitical crises, when uncertainty around arrival times, port congestion, or fuel costs complicates planning.

Digital platforms can also improve efficiency at warehouses and terminals. Features like dock scheduling reduce truck waiting times and congestion, while automated documentation lowers administrative workload. As a result, logistics teams can focus more on managing disruptions than on routine processes.

Overall, digital freight platforms strengthen the resilience of road transport by enabling faster carrier sourcing, better communication, and more data-driven decisions, helping companies adapt more effectively to unstable market conditions.

Conclusions