How Middle East Shipping Disruptions Are Reshaping Recovered Fiber Trade in 2026

The global recovered fiber trade depends on predictable shipping routes. When a container of OCC leaves Savannah or Houston bound for a paper mill in Southeast Asia, the price was calculated assuming a specific transit time, a specific freight rate, and a specific delivery window. In March 2026, none of those assumptions hold. The ongoing conflict involving the United States, Israel, and Iran has effectively closed the Strait of Hormuz to normal commercial traffic, and the ripple effects are reaching every corner of the recycled materials trade.

What Is Happening

The Strait of Hormuz, a narrow waterway between Iran and Oman, handles approximately 20% of global oil trade and a significant share of container traffic between Asia, the Middle East, and Europe. Since the escalation of hostilities in early 2026, shipping through the strait has become unreliable. Insurance premiums for vessels transiting the area have increased substantially, and several major shipping lines have begun rerouting vessels around the Cape of Good Hope — adding approximately two weeks to transit times between Asia and Europe, and affecting routes between the U.S. Gulf Coast and the Indian subcontinent.

The Bureau of International Recycling (BIR) and multiple shipping industry analysts have warned that these disruptions are not temporary. As long as the conflict continues, shippers face a choice between higher insurance costs for direct routing or longer transit times and higher fuel costs for alternative routes.

The Cost Impact

The numbers are concrete. CMA CGM, one of the world's largest container shipping lines, introduced an emergency surcharge of $3,000 per FEU (forty-foot equivalent unit) for containers directly impacted by the Strait of Hormuz closure. Other carriers have implemented similar surcharges ranging from $1,500 to $3,500 per container.

For context, a standard 40-foot container of baled OCC weighs approximately 20–24 metric tons. At current export prices of $148–155 per metric ton CNF for Southeast Asia, the total cargo value is roughly $3,000–$3,700. A $3,000 emergency surcharge effectively doubles the delivered cost of the material. This fundamentally changes the economics of every export transaction.

Who Is Affected

U.S. exporters shipping to India and the Middle East are most directly impacted. India is one of the largest importers of U.S. OCC, and many shipments transit through or near the affected zone. Exporters are reporting that Indian buyers are pushing back on price increases, creating a squeeze where the exporter absorbs the additional freight cost or loses the sale.

Southeast Asian buyers (Indonesia, Malaysia, Vietnam, Thailand) are affected to a lesser degree, as most U.S.-to-Southeast Asia routes transit the Pacific rather than the Indian Ocean. However, vessels that would normally serve Pacific routes are being redeployed to cover disrupted routes elsewhere, reducing available capacity and pushing rates up across the board.

European traders are heavily exposed. Europe depends on Suez Canal transit for trade with Asia, and the broader Middle East instability has affected Red Sea and Suez traffic as well. MRW (Materials Recycling World) reported on March 27, 2026, that export OCC prices in the UK have adjusted down by approximately £10 per tonne to absorb the first wave of $200–300 freight increases. European testliner producers are seeking price increases of EUR 30–50 per tonne to recover compressed margins.

What This Means for Domestic OCC Markets

Paradoxically, shipping disruptions can benefit domestic OCC markets. When export becomes more expensive, more material stays in the domestic market, increasing supply for U.S. mills. This can put downward pressure on domestic prices in the short term.

However, the effect is not straightforward. U.S. mills that compete with imported finished products (corrugated board, packaging) may benefit from tariffs and shipping disruptions that make imports more expensive. This can increase domestic demand for corrugated board, which in turn increases demand for OCC as a raw material.

The net effect depends on the balance between increased domestic supply (from diverted exports) and increased domestic demand (from import substitution). In the current environment, these forces are roughly offsetting, which is one reason domestic OCC prices have been relatively stable even as export markets face turmoil.

Tariffs Add Another Layer

The shipping disruptions are occurring against a backdrop of escalating trade policy. Section 122 tariffs of 10% took effect on February 24, 2026, with a threatened increase to 15%. While these tariffs primarily affect manufactured goods rather than raw materials like OCC, they have secondary effects on the recovered fiber market.

Tariffs on imported corrugated board and packaging products increase demand for domestically produced alternatives. Domestic corrugated board production requires OCC as a raw material. So tariffs that reduce imports of finished packaging can indirectly increase demand for domestic OCC.

At the same time, retaliatory tariffs from trading partners can affect U.S. exports of finished goods that are shipped in corrugated packaging — reducing the generation of OCC at the destination and potentially affecting return-load economics for shipping containers.

What Exporters Should Do

Renegotiate freight terms. If you have existing contracts with fixed freight rates, review whether force majeure or market adjustment clauses apply. Many contracts signed before the Hormuz disruptions assumed freight rates that are no longer available.

Shift to Pacific routes where possible. If your buyers are in Southeast Asia (Indonesia, Malaysia, Vietnam), shipping from West Coast ports via the Pacific avoids the affected zone entirely. The trade-off is higher inland transportation costs to reach West Coast ports from eastern U.S. supply sources.

Consider domestic alternatives. If export margins have been compressed to zero or negative, redirecting material to domestic mills may be the better option in the short term. Domestic prices are lower, but so are logistics costs and payment risk.

Lock in rates where you can. Freight rates are volatile and trending upward. If you can secure favorable rates for Q2 shipments, doing so reduces your exposure to further increases.

What Buyers Should Do

Expect longer lead times. If you are a mill in India or Southeast Asia purchasing U.S. OCC, build an additional 10–14 days into your supply planning. Vessels are taking longer routes, and port congestion at alternative routing points is increasing.

Diversify sourcing. Consider sourcing from Europe, Japan, or Australia if U.S. material becomes too expensive on a delivered basis. The freight differential may make alternative origins competitive even if the FOB price is higher.

Monitor the conflict. The shipping disruptions are directly tied to the geopolitical situation. Any de-escalation could rapidly normalize freight rates and transit times. Conversely, further escalation could close additional routes or increase surcharges further.

The Outlook

There is no indication that the Middle East shipping disruptions will resolve quickly. The conflict has structural roots, and the maritime industry is adapting to a new normal of higher costs and longer transit times. For the recovered fiber trade, this means that the era of cheap, predictable ocean freight is over — at least for now.

The companies that will navigate this environment successfully are those that maintain flexibility in their logistics, diversify their buyer and supplier relationships, and price their transactions with realistic freight assumptions rather than hoping for a return to pre-disruption rates.

Conglobus International manages logistics and freight coordination for every shipment. If you need help navigating the current shipping environment, contact us to discuss your specific situation.