Thai Export Freeze: Hormuz Freight Fallout

Thailand’s export engine is stalling — and freight is the bottleneck

The Thai National Shippers’ Council (TNSC) now warns that Thailand’s 2026 export growth could fall below its original 2–4% target. The reason is not weak demand alone. It is a convergence of logistics disruption, surging freight costs, and frozen order books — all amplified by the ongoing Strait of Hormuz crisis.

For freight operators and exporters on the Thailand–Middle East corridor, the picture is bleak. Cargo is being returned from destination ports. New purchase orders have stalled. And the cost of moving goods keeps climbing.

Key numbers

The scale of disruption is measurable:

• 5–10% of Thai cargo shipped to the Middle East is being returned — goods stuck at ports or turned back mid-route
• New orders frozen — importers across multiple markets have shifted to “wait and see” mode, halting fresh purchase orders
• Freight rates surging — bunker fuel costs remain elevated, with VLSFO prices still 2–3x pre-crisis levels
• War-risk insurance premiums up significantly on Middle East–bound routes
• Raw material stocks running out by May–July for manufacturers dependent on Middle Eastern petrochemical inputs

These are not projections. They are reported conditions from Q2 2026, based on statements from TNSC chairman Thanakorn Kasetsuwan and senior industry figures across food, rubber, and polymer sectors.

Which sectors are hit hardest

Fresh food and agriculture

Perishable goods are the most vulnerable to shipping delays. Thai food exporters report that the Middle East market — which imports roughly 90% of its food — will post negative growth in 2026. The problem is stark: demand exists, but cargo cannot reach buyers reliably.

Packaging costs compound the pain. Plastic — a primary packaging material for food exports — accounts for 10–50% of production costs in the sector. With petrochemical raw materials sourced heavily from the Middle East, supply has tightened and prices have become unpredictable.

Rubber and polymer components

S.K. Polymer, a major Thai rubber parts manufacturer, reports negative export signals since Q4 2025. The company’s raw material stocks — including specialty processing oils like paraffinic oil — will last only until July 2026 thanks to early quota reservations. Industry-wide, most firms have supply only through May.

Suppliers are quoting availability but refusing to lock prices. The next round of customer negotiations will likely involve price increases that neither side wants to absorb fully.

Electronics and automotive parts

These sectors face a double squeeze: reduced export volumes mean domestic suppliers (like rubber component makers) also lose orders. The downstream effect ripples through Thailand’s manufacturing chain.

The Middle East route problem

For freight forwarders operating between Southeast Asia and the Gulf, the operational reality has shifted:

Route uncertainty is the new normal. Vessels face unpredictable delays at berthing, extended transit times on diversionary routes, and the possibility that cargo simply cannot be delivered. Some shipments are being returned to origin — a costly outcome that disrupts cash flow and trade cycles for exporters.

Insurance and surcharges keep climbing. War-risk premiums on Middle East routes have increased substantially. Combined with elevated bunker costs, the total landed cost of goods has risen enough to make marginal shipments uneconomical.

Importers are not ordering. Even where routes remain open, buyers in the Middle East and parts of Europe have paused procurement. This “wait and see” posture means the pipeline of new orders has gone quiet — a leading indicator that Q3 volumes will also be weak.

For LCL consolidation services on the Bangkok–Jebel Ali corridor, reduced volumes per shipper make consolidation more important than ever — but also harder to schedule efficiently when individual order sizes shrink.

How exporters are adapting

Thai exporters are not standing still. The strategies emerging across sectors include:

Market diversification. Companies are actively prospecting in ASEAN, South Asia, and parts of Africa — markets with more flexible shipping routes and less exposure to the Hormuz bottleneck. S.K. Polymer, for example, is expanding from its traditional electronics and automotive customer base into medical devices and construction.

Cost compression. Firms are reducing overtime, optimizing production cycles, upskilling workers for higher efficiency, and renegotiating raw material contracts. Investment plans for 2026 are being deferred where possible.

Currency sensitivity. Exporters note that a weaker baht (around 33 THB/USD) would materially help competitiveness. The recent baht strength has been an additional headwind, making Thai goods less price-competitive against regional rivals.

Government response

The Thai government has mobilized on multiple fronts:

• Trade Policy and Strategy Office (TPSO) is preparing to revise the 2026 export growth forecast downward from the original 2–3% target
• 58 commercial attaché offices worldwide have been tasked with finding alternative import sources for critical materials (fertilizers, energy inputs)
• EXIM Bank is offering special credit facilities for exporters expanding into new markets
• The private sector is pushing for import duty relief and low-interest loans at approximately 3% to help businesses survive the disruption period

What this means for freight operators

The current environment demands three things from logistics providers:

1. Route flexibility. The ability to offer alternative routing when primary corridors are disrupted is no longer a premium service — it is a baseline expectation. Operators with established networks across multiple Southeast Asian ports are better positioned.

2. Cost transparency. With fuel surcharges, war-risk premiums, and insurance costs all moving targets, shippers need clear breakdowns of what they are paying and why. Vague “all-in” rates erode trust when costs are volatile.

3. Consolidation expertise. As individual shipment sizes shrink, efficient LCL consolidation becomes a competitive differentiator. Forwarders who can aggregate smaller volumes reliably will capture business that FCL-focused competitors cannot serve economically.

How exporters stay moving through this

Thailand’s 2026 export outlook has darkened materially. The Hormuz crisis is not just a headline — it is a concrete disruption that has returned cargo, frozen orders, and compressed margins across the Thailand–Middle East trade corridor. Exporters and freight operators who diversify routes, manage costs aggressively, and maintain consolidation capability will be best positioned to weather what industry leaders expect to be at least three more months of turbulence.