The Middle East conflict is disrupting trade through the Strait of Hormuz — a critical chokepoint handling ~20% of global oil shipments — halting non-Iranian sea traffic and spiking air freight rates by over 70%. Paper-based trade processes are failing under pressure, while digitally enabled firms reroute shipments and update documentation in hours versus days. Extended transit times are tying up working capital, especially for small exporters; Visa-commissioned PYMNTS data shows supply chain finance and dynamic discounting can mitigate this strain by decoupling payment timing from physical delivery.
According to www.pymnts.com, the escalating conflict in the Middle East — referenced in the source as ‘the war in Iran’ — is reshaping global trade flows, spiking air freight rates by over 70% on impacted corridors, and severely constraining maritime traffic through the Strait of Hormuz.
Strait of Hormuz Chokepoint Under Pressure
As of March 16, non-Iranian sea traffic through the Strait of Hormuz has fallen to near standstill due to ship attacks and heightened security risks. This chokepoint handles approximately 20% of global petroleum liquids trade (U.S. Energy Information Administration, 2023), making its disruption acutely consequential for energy supply chains — and by extension, electronics, pharmaceuticals, and other high-value goods reliant on just-in-time logistics.
Air freight corridors over the Middle East are also under strain: major logistics hubs including Dubai, Abu Dhabi, and Doha face route closures. These disruptions echo earlier shocks — notably the Russia-Ukraine war and the Red Sea attacks — but differ in geographic centrality and concentration of risk.
Digital Trade Infrastructure vs. Paper-Based Processes
The crisis is exposing critical vulnerabilities in legacy trade operations. Despite years of digitization discourse, much of global trade still depends on physical documentation: bills of lading, inspection certificates, and letters of credit routinely move via courier networks rather than secure digital platforms.
This reliance becomes operationally crippling when shipments require rapid rerouting. Companies with integrated digital trade platforms — where documentation, compliance checks, and financing are unified — can respond within hours. In contrast, organizations dependent on manual coordination across banks, insurers, and logistics providers may require days to adjust documentation, update insurance coverage, or revise financing terms.
- Digital operators: amend documentation electronically, update insurers, and adjust financing in near real time
- Manual operators: spend days coordinating changes across multiple institutions
Working Capital Strain Across the Supply Chain
Delays directly inflate working capital requirements. Goods that previously moved from factory to customer within predictable timeframes now sit longer in containers, aircraft holds, or temporary storage — extending inventory-in-transit periods by weeks. Companies must finance this inventory longer while still meeting supplier payment obligations on schedule.
For large multinationals, the impact may be absorbable. For smaller exporters and suppliers operating on thin margins, the strain is acute. The PYMNTS Intelligence report “2025–2026 Growth Corporates Working Capital Index: Research Report Data Book” — commissioned by Visa — confirms that innovations like virtual cards, dynamic discounting platforms, supply chain finance programs, and embedded payment networks help extend payment cycles while enabling suppliers to access cash early through financing mechanisms.
Source: www.pymnts.com
Compiled from international media by the SCI.AI editorial team.
