Global business has a major new source of disruption to contend with: maritime chokepoints. They have always existed, but recent events in the Strait of Hormuz and the Red Sea highlight their vulnerability and the resulting disruption to global trade.
A Global Threat
About 80% of world trade by volume moves by sea, and much of it travels through about a dozen chokepoints worldwide. (See Exhibit 1.) Over the past five years, disruption has hit five chokepoints that together carry about a third of global maritime trade: the Suez Canal (2021), the Panama Canal (2023–2024), the Bosporus Strait (2022), the Bab al-Mandab Strait (2023–the present), and the Strait of Hormuz (2026). The causes range from operational accident and climate-related water scarcity to war and deliberate attacks.
Geopolitical tensions have become the most prominent threat. Both state and nonstate actors can exploit narrow waterways to exert strategic or economic pressure. A route need not be formally closed; even the threat of attack can reduce traffic, cause carriers to suspend service, fragment established shipping patterns, and sharply increase freight and insurance costs.
Technology is making such disruption easier and less expensive to achieve. Low-cost aerial and surface drones, precision missiles, GPS jamming, and AIS (Automatic Identification System) spoofing have all emerged as threats to commercial shipping. Climate is another source of risk, as the Panama Canal restrictions showed. Over time, a melting Arctic could make northern shipping routes more navigable, increasing the strategic importance and potential vulnerability of passages such as the Bering Strait.
Regardless of cause, chokepoint disruptions can have consequences far beyond direct effects such as delayed cargo. Captive routes offer no practical maritime alternatives, while rerouting around other chokepoints can add thousands of kilometers of sailing, weeks of added time, and millions of dollars of cost. Freight spikes and delays reverberate through restocking cycles and consumer prices well after the chokepoint reopens. Shipping takes time, and supply chains often overcorrect through double ordering and safety stock buildup.
Five Lessons
Chokepoints are one more, far from simple factor for global companies to integrate into their planning and decision making. Here are five lessons to help guide planning going forward.
1. Not all chokepoints are created equal. Geography and trade volumes determine the severity of disruption. (See Exhibit 2.)
Mitigation measures for captive chokepoints, such as Hormuz, the Bosporus, and the Danish Straits, require shifting to air or overland routes. These options face their own capacity limits under crisis strain, and they are often slower or more expensive.
Shipments through other chokepoints can be rerouted, but at a price. For example, a ship carrying goods from southeast to northeast Asia would normally pass through the Taiwan Strait or the Luzon Strait. If both are shut, ships can divert east into the open Pacific, around the Philippines. But that turns a roughly 4,000-kilometer voyage into one of about 5,500 kilometers, a 27% increase. Increases in rerouting distances are much more severe for other chokepoints, including Gibraltar (85%), Panama (47%), Suez (46%), and Bab al-Mandab (44%).
Distance is not the only factor. Trade volume is also important. Rerouting around the Strait of Taiwan and the Strait of Malacca, for example, is relatively easy. But the sheer volume of raw materials and finished goods that pass through them means disruption still adds substantial cost. In the case of Malacca, if access to all the various channels through the Indonesian archipelago were blocked, a large volume of shipping would have to take an expensive and time-consuming detour.
In the case of every chokepoint, the severity of disruption ultimately depends on market dynamics such as spare-vessel capacity, the ability to sail faster (at higher fuel cost), and shippers’ ability to delay or switch modes. Increased shipping costs push prices higher, and not only because of the extra miles traveled. Longer voyages tie up each vessel for more days per trip, so the same standing fleet completes fewer round trips and moves fewer containers per month. Fearing a worsening crunch, shippers rush to secure space, pushing bidding rates higher still. Effective capacity falls even though no ships are lost. Systemic knock-on effects occur when major carriers suspend transits and redeploy tonnage, as several have done since 2023 around Cape of Good Hope routes because of the tensions at Bab al-Mandab. Longer distances mean shipping capacity tightens and rates rise on the alternatives lanes.
For companies, chokepoint risk is rarely confined to a single location; it is a portfolio problem. For example, a single supply chain may involve several potential chokepoints, meaning that businesses must manage their combined exposure rather than assess each route in isolation. Disruptions can also occur at multiple chokepoints simultaneously; for example, a Saudi exporter faces potential constraints at the Strait of Hormuz, Bab al-Mandab, and the Suez Canal, affecting different parts of its export network and limiting its ability to reroute shipments.
2. Geographical impacts are uneven. The impact of the Hormuz disruption varies widely by region, with the primary determinant being each market’s dependence on the imports that travel through it. (See Exhibit 3.) Neighboring countries in the Gulf Cooperation Council felt the most immediate effects. Before the crisis, more than 50% of imports into some GCC countries (Bahrain, Kuwait, Qatar, and the UAE) passed through the Strait of Hormuz.
Further afield, Asian countries rely heavily on shipping through Hormuz. Pakistan is among the most exposed, depending on the strait for approximately 20% of imports, while India relies on the strait for 12% of its imports. China, Japan, and South Korea have lower but still material exposure of 5% to 10%, a range shared by several African economies, including South Africa, Tanzania, and Namibia.
Governments have implemented more than 200 demand and supply measures (for example, expanded energy subsidies in Japan and a strategic reserve release in China) to manage the disruption. Countries in Southeast Asia have seen significant impacts from their heavy energy dependence on the Gulf, with some resorting to mandating shorter workweeks and limiting car journeys and air-conditioning use.
The same disruption that hit many Asian countries hard has barely touched imports to the US, only about 1% of which come through Hormuz. Still, the disruption has affected the US economy through higher prices for fuel and other commodities that transit the strait, such as plastics and fertilizer.
While the Gulf states and their Asian energy customers are acutely exposed to Hormuz, trade in Russia, Germany, and the Baltic states hinges on the Danish Straits and the English Channel. Black Sea exporters (Russia, Ukraine, and Bulgaria) rely on the Bosporus Strait.
In theory, a severe disruption could push goods to air or overland routes, but when a chokepoint shuts down for geopolitical reasons, the same conflict can constrict those alternatives. During the ongoing conflict in the Middle East, air cargo volumes through the major Gulf hubs have fallen by 80% or more from preconflict levels, so air freight capacities are limited.
3. Duration is key factor in determining response. The relationship between the severity and the duration of disruption is not necessarily linear. In the case of Hormuz, where the disruption has lasted for months, the response has shifted from managing an immediate supply shock to addressing a broader set of economic pressures. Energy-producing nations have released oil reserves as rising prices incentivized market participants to draw down inventories. Producers outside the Gulf, particularly the US, have lifted exports to record levels. As the disruption persisted, demand fell.
That said, duration does dictate the response. A two-week shock is an inventory problem that temporary buffers can bridge. A months-long suspension becomes a structural problem that only rerouting, re-sourcing, or re-engineering can address.
Moreover, Hormuz shows that the current disruption isn't the only concern. Uncertainty over duration and the risk of repeat closures matter, too. Many Gulf countries are now working to reduce their exposure, diversifying away from single chokepoints, de-concentrating supply chains, and cutting reliance on imported energy, external labor, and technology.
4. Chokepoint exposure varies widely by sector and supply chain. Disruption at Hormuz has affected the flow not only of oil and gas, but also of aluminum, fertilizer, chemical feedstocks, and other critical inputs for many industrial supply chains.
Sectors depend on maritime trade to different degrees. (See Exhibit 4.) For instance, around 95% of mining’s trade volume and 89% of energy’s moves by ship. Some 30% of energy's ocean trade runs through the Strait of Hormuz. About 55% of electrical machinery moves through three Asian straits: Malacca, Taiwan, and Luzon. Black Sea grain depends on the Bosporus, which has no maritime workaround.
Concentrations of individual products can be even higher. For example, because China leads the world in clean-energy equipment manufacturing, solar and wind components funnel through the Asian chokepoints, with some 55% of clean-energy ocean trade routing through either the Taiwan Strait or the Luzon Strait.
Automotive sits at the other end of the spectrum. The risk is not concentrated in any single chokepoint, but the ocean trade of a significant share of every major component group is routed through several chokepoints at once. (See Exhibit 5.) Exposure is heaviest through the Straits of Taiwan, Luzon, Gibraltar, and Malacca. Tires and tubes are the most exposed components, with roughly a third of ocean trade crossing the Strait of Taiwan, the Strait of Luzon, and the Strait of Malacca.
5. Shocks spread unevenly and on different timelines. Some effects of a chokepoint disruption are immediate and broad. At the start of the Middle East conflict, global oil prices rose almost immediately, affecting businesses and consumers worldwide, including those with little direct reliance on shipments through the Strait of Hormuz.
Other effects take longer to emerge. Inventories may initially cushion the loss of supply, while contracts and production cycles delay the pass-through of higher input costs. Over time, however, delayed cargoes and depleted stocks can lead to physical shortages. Price increases also move down the value chain—from oil and petrochemical feedstocks to polymers and, eventually, finished products such as rubber gloves. Some of these consequences are predictable, while others emerge through supplier relationships several tiers removed from the original disruption.
What Business Leaders Should Do Now
Disruptions affect everyone, but they don’t have to affect everyone in the same ways. The goal for businesses should not be maximum resilience but the right balance between risk and cost. Hedging, holding inventory, diversifying suppliers, and localizing production can all reduce exposure, but each comes at a price. In some cases, companies may choose to accept greater exposure because the ongoing cost of protection would be higher than the likely cost of disruption. The critical step is to make that decision preemptively, based on a clear understanding of the exposure, rather than reactively during a crisis. The steps below can help companies make the optimal choice.
Identify your exposure. Map your supply chain against chokepoints. Trace which ones potentially affect your sources of supply, as well as those of your second- and third-tier suppliers. Even exposures buried several tiers deep in a product’s makeup can be managed once they are identified. A 2025 BCG survey of more than 180 companies found that end-to-end supply chain visibility was their second-most-cited internal planning challenge, behind only forecast accuracy.
Estimate exposure by scenario. Weigh the likelihood of various triggers and assess which key trade routes for your supply and product mix are captive (threatening availability and price) versus reroutable (adding cost and time). AI tools can accelerate this process, such as a digital twin that can map deep-tier dependencies and stress-test scenarios.
Calculate cost. Translate actual and potential disruption scenarios into cost of goods sold and margin impacts, thereby turning exposure assessments into ranked, category-level priorities. The margin perspective is critical, as a price spike in a commodity input, such as polypropylene, can be marginal for a maker of high-value goods but fatal for a maker of low-value products in which the resin accounts for most of the cost. The former may not need to act, while the latter needs to develop alternatives.
Take action. Once you have assessed the economics and chosen your risk posture, select targeted measures, such as the following, to reduce your most consequential exposures:
- Diversify suppliers. Spread sources of supply across different origins so no single chokepoint can interrupt the entire supply base. Check routes, not just origins: suppliers in different countries may all funnel through the same straits. Localization and in-region supply chains are another solution.
- Build buffers. Improve your preparedness for an emergency by maintaining extra inventory, safety stock, or dual-sourced components for the most critical inputs and finished goods.
- Reduce critical price exposure. Hedging is one example. Jet fuel typically makes up 20% to 30% of airlines' operating costs; the Hormuz closure elevated those prices by about 50%. A sample of European airlines tracked by the International Air Transport Association had hedged up to 70% of fuel usage against rising prices leading into the closure; in contrast, many North American airlines had largely moved away from fuel hedging.
Chokepoints have always been there. What's changed is a growing recognition of the economic leverage embedded in these locations and the number of ways they can be disrupted. It’s a growing risk factor and cost for global businesses. Companies need to move now to better understand both the strategic and financial implications so they are prepared for a more geographically challenging future.
