Iran conflict to drive up UK prices as freight costs soar

Disruption to shipping lanes linked to the conflict involving Iran is pushing up freight costs and raising the prospect of higher UK retail prices for a range of imported goods, according to delivery specialist Parcelhero.

The Strait of Hormuz is a key route for global energy shipments and a major corridor for trade between Asia, the Middle East and Europe. Shipping and aviation have faced diversions and temporary closures in the region, adding time and cost to moving goods.

Parcelhero said the knock-on effects are now extending beyond the immediate war zone. It expects higher transport and logistics costs to filter through supply chains and show up in UK shop prices, while exporters face higher costs on overseas shipments.

David Jinks M.I.L.T., Parcelhero's Head of Consumer Research and a former editor of Lloyds Shipping Index, said the conflict was driving volatility in energy markets and adding fresh pressure on freight routes.

"The joint American and Israeli campaign against Iran has already driven up energy prices. Even if President Trump decides to end the conflict today, the damage has been done. Brent crude approached $120 a barrel on 9 March, its highest level since Russia's invasion of Ukraine. UK wholesale gas prices spiked to 171p per therm, far above the typical 78-85p average expected during late 2025. Prices may now have fallen back slightly but supply chains will have to absorb those cumulative costs somehow," he said.

Higher energy costs typically feed into manufacturing, warehousing and transport. Retailers may also face higher surcharges from logistics providers when fuel prices rise and routes lengthen.

Hormuz chokepoint

The Strait of Hormuz sits between Iran and Oman and is one of the world's most important shipping corridors. A significant share of global oil exports passes through the strait. Any sustained reduction in traffic can tighten supply and raise the cost of moving energy and other goods.

"Beyond energy markets, the longer-term effects on manufacturing and logistics are now beginning to emerge. Many major transport corridors have been heavily disrupted. The Strait of Hormuz, crucial for 20% of global oil shipments, is being avoided by most vessels. Reduced flows through this chokepoint are expected to raise Europe's transport and logistics costs, hitting energy-intensive industries such as chemicals and manufacturing across the UK and EU, ultimately raising prices," Jinks said.

Europe's logistics networks have already been adjusting to instability on other routes. Some container services have reduced exposure to the Red Sea in recent months because of attacks linked to the Houthis, pushing more vessels onto longer routes around southern Africa.

Parcelhero said fresh disruption around the Gulf is adding pressure on capacity and scheduling. "The Middle East conflict is also causing congestion at ports far from the region as ships are rerouted. Maritime shipping faces a perfect storm as the conflict causes chaos in the Strait of Hormuz even as shipping lines were already avoiding the Suez Canal due to Houthi attacks. Significantly more shipping will now opt to sail around the Cape of Good Hope - a detour that is already absorbing roughly 2.5 million TEUs of global container capacity and that will add 10-14 days and considerable cost to journeys," Jinks said.

China exposure

The UK imports a wide range of consumer goods and industrial components from China, including electronics, toys, homewares and clothing. Disruption to Chinese production or shipping schedules can affect UK availability and prices.

Parcelhero highlighted China's reliance on the Strait of Hormuz for energy and feedstocks used upstream in manufacturing. It said higher costs and volatility could lead to production cutbacks across industrial supply chains.

"China is also likely to face significant challenges. It is particularly dependent on open access to the Strait of Hormuz. Around half of its oil imports pass through the Strait, along with essential minerals and chemicals such as naphtha and sulphur. Rising costs and supply volatility could lead to production cutbacks in China's industrial supply chains, particularly in automotive and technology manufacturing," Jinks said.

"Any resulting shortages or price increases will eventually be felt here in the UK. Over 10% of all UK imports are from China and Britain imported nearly $100bn-worth of Chinese goods in 2024. To put it bluntly, while manufacturers and retailers will pay more for every container carried in the short term, in the long term it will be consumers who end up paying. From toys to electronics to furniture, expect prices to rise in the coming months. In other words, it's Joe Public who will foot the bill for this conflict," he said.

Air freight strain

Air cargo has also been hit by closures and restrictions in regional airspace. Passenger flights carry a large share of global air freight in their cargo holds, so widespread cancellations can quickly reduce capacity for time-sensitive goods.

"Air freight is, if anything, experiencing even more severe disruption than maritime shipping. Much of the region's airspace was closed for a period, grounding aircraft and paralysing major hubs in Dubai and Doha. Around 40,000 flights were cancelled initially - the largest shock to global aviation since the Covid-19 pandemic," Jinks said.

"Remember that 54% of the world's total air freight is transported in the bellyhold of passenger aircraft, rather than dedicated cargo planes. That has already caused huge disruption to international air freight. That's why companies such as Adidas have cautioned that air cargo shipments have been delayed," he said.

Parcelhero said some apparel shipments were stranded in South Asia as capacity tightened and backlogs formed. It also pointed to semiconductor supply chain risks, including materials sourced from the Middle East that are used in chip production.

"That means it's not only cars and electronics that will be impacted. Clothing shipments for retailers including Zara were stranded in Bangladesh and India as reduced cargo flights created backlogs. South Asia, a major apparel producer, supplies fast-fashion brands with a steady flow of garments, making these disruptions particularly acute," Jinks said.

Parcelhero added that express parcel services on some routes may be less exposed than bulk container freight. However, it expects continued volatility in global logistics costs as carriers manage route risk, capacity constraints and higher fuel prices.