Newly opened trade corridors between the UAE and Oman are playing a critical role in the transport of essential and time-sensitive cargo, as the Strait of Hormuz remains closed.
However, the new routes do not have the capacity for the volumes of cargo that were previously shipped through the Strait of Hormuz, and reopening the narrow channel in the Arabian Gulf remains critical for the full flow of trade activity to resume, analysts say.
The corridors “help maintain flows of priority and time-sensitive cargo, supporting regional trade continuity”, Jack Kennedy, head of country risk for the Middle East and North Africa at S&P Global Market Intelligence, told The National.
Sharjah and Oman this week launched a new logistics corridor to move goods by land and sea more easily, primarily through the Khatmat Malaha Border Crossing in Kalba, Sharjah, and the Al Madam border point in the same emirate.
The arrangement allows goods to cross borders more seamlessly, bound for Oman's Sohar port on the east coast, as well as Duqm and Salalah.
Hundreds of cargo ships are stuck in the strait, which is under a double blockade by Iran and the US , hindering trade between countries in the Middle East and the rest of the world.
Before the conflict, more than 800,000 TEUs (twenty-foot equivalent units) of goods were imported into the Middle East each month, with 450,000 TEUs exported..
Trade has been vastly reduced, with only 20 to 30 per cent transiting through land bridges from the UAE, Jeddah in Saudi Arabia, Turkey and Oman, data provided by pricing platform Xeneta shows.
About 20 per cent of global crude and liquefied natural gas (LNG) supply was shipped through the strait prewar, but this has also stalled.
The new overland routes are playing a crucial role in transporting essential cargo such as food, pharmaceuticals, industrial components, retail inventories and critical inputs required for manufacturing.
They are routed through the Omani ports of Sohar, Duqm and Salalah, all of which lie outside the strait, and transported overland into the UAE by lorry.
Retail and consumer goods are among the largest beneficiaries, said Roxane El Mawla, group chief executive at Dubai-based trading platform Uexo.com.
“Industrial sectors also benefit significantly, as manufacturing operations rely on imported intermediate goods, machinery components, chemicals and industrial materials,” she said. Construction materials and infrastructure-related imports are also likely to receive priority, given the scale of ongoing development projects.
Car supply chains, electronics, medicine, and logistics services are also expected to benefit from the diversified corridors.
Dubai’s 'green corridor' with Oman – set up after Iran began attacking international shipping – also plays a crucial role in transporting goods.
The number of customs declarations through the green corridor surged from 12,000 in March to nearly 100,000 the following month, with the value of transported goods rising from Dh1 billion ($270 million) to more than Dh8 billion, recent government data indicates.
As part of green corridor, loads arriving from Oman are transported overland to Dubai through the Hatta Border Crossing.
A green corridor relies on cleared shipments, digital documentation, and coordinated border procedures, allowing approved goods to pass with minimal inspection and delay. It ensures faster delivery as most bureaucratic hurdles are removed or greatly reduced.
“It’s part of a sort of a regional trend towards supply chain diversification,” Oliver Cornock, global editor-in-chief of Oxford Business Group, told The National. “A corridor such as this just creates more flexibility, and adds a greater number of cargo ports and road freight options.”
High prices here to stay
Though new routes have been set up to speed the delivery of goods and mitigate supply chain disruption to some extent, prices are expected to remain high due to current limitations in maritime shipping and higher-than-usual freight charges.
Xeneta data shows container freight rates from China to Khor Fakkan port in the UAE have gone up by 300 per cent since the outbreak of Iran war.
The additional leg of transportation from Oman to the UAE adds to overall logistics costs. In addition, alternative corridors have lower throughput capacity than sea routes, limiting their ability to fully absorb displaced trade volumes.
“The main economic benefit is not necessarily cheaper goods, it's about a more stable and reliable supply chain alternative,” Mr Cornock said.
Alternative routes support trade
The closure of the Strait of Hormuz is also pushing other countries in the region to develop new trade routes.
Saudi Arabia is positioning Neom as a logistics hub, with the development of a new trade corridor connecting European and Gulf markets that bypasses the Strait of Hormuz.
The Port of Neom, part of the $500 billion mega project, is offering an integrated logistics corridor that combines land and sea transport for the transfer of goods to Gulf markets.
It is a strategic gateway on the Red Sea, connecting the UAE, Kuwait and Iraq to markets in Europe using lorries and ships. Egypt, the Arab world’s most populous country, is part of the corridor.
The new routes come on top of crude-oil pipelines that the UAE and Saudi Arabia are currently operating to export oil.
Last week, Abu Dhabi National Oil Company said it would rapidly expand the West-East Pipeline, which carries oil from Habshan, one of the world's largest oilfields and gasfields, in the Abu Dhabi desert, to ships waiting in Fujairah on the east coast, bypassing the strait.
Iraq is exporting goods through a pipeline and using lorries to reach Syrian terminals for shipment to global markets., The Saudi Ports Authority and Sharjah-based logistics firm Gulftainer are teaming up on a new trade corridor to connect Sharjah and Dammam in eastern Saudi Arabia. The project will involve sea and land transport to reduce transit times and improve cargo flow.
Geopolitical risks
The new trade corridors, however, face geopolitical risks, and their success depends on sustained political alignment and operational coordination between the UAE and Oman.
Any regulatory divergence, border restrictions, or customs friction could reduce efficiency, said Ms El Mawla of Uexo.
Omani infrastructure remains exposed to the “same risks in the region, to a certain extent, and to potential capacity limits”, she added.
Once normal shipping conditions resume, a substantial portion of the cargo is expected to revert to traditional maritime routes, with a smaller volume flowing through alternative corridors.
