Regional QHSE & Compliance Manager – Americas

Dear Valued Customer,

Following our previous Customer Advisories, we are providing an updated consolidated view on the ongoing geopolitical situation in the Middle East and its continued, critical impact on global air and ocean supply chains.

Recent geopolitical developments, including a ceasefire framework and ongoing diplomatic engagement, have introduced early signs of potential stabilization. However, the operational environment remains highly volatile, constrained, and far from normalized. Direct discussions held this week with multiple top global ocean carriers confirm that the situation on the ground remains extremely fragile, and the coming days will be critical in determining the direction of recovery.

What initially evolved into a regional disruption has become a global supply chain crisis, and the industry is now entering a complex recovery phase, characterized by backlog clearance, network imbalances, and continued uncertainty.

In parallel, active negotiations are currently underway between Iran and the United States aimed at de-escalation. While these diplomatic efforts are being closely monitored, it is important to note that:

• The maritime security restrictions and blockages currently in place remain officially in effect
• There has been no formal or binding easing of navigational risk status communicated to carriers or insurers
• There are potential spillover risks, including threats of disruption or attacks impacting additional ports and maritime infrastructure across the broader Gulf region

As a result, carriers and logistics operators remain in a heightened risk posture, maintaining conservative operational and routing decisions until sustained and verifiable stability is established.

Employee Safety and Operational Status:

Employee safety remains our highest priority. All Pentagon employees in the affected areas remain safe. Return to work protocols have been implemented at all sites in the Middle East whilst closely monitoring local authority guidance and adhering to all safety protocols.

Global Energy Impact and Carrier Surcharges (Air & Ocean):

Global energy markets remain under pressure despite early de-escalation signals. Oil price volatility continues, driven by uncertainty around critical maritime corridors, particularly the Strait of Hormuz.

All major carriers continue to maintain and expand cost recovery measures globally, including:

• Emergency Fuel Surcharges and Emergency Bunker Adjustment Factors (EBAF)
• War Risk, Security, Congestion, and Market Disruption surcharges
• Peak-type surcharges and general rate increases

These measures continue to reflect:

• Reduced effective capacity due to rerouting and extended transit times
• Elevated insurance and war risk premiums
• Persistent congestion and equipment imbalances
• Increased operational complexity and security requirements

In addition, inland transportation and handling-related surcharges are increasingly being adjusted across regions, reflecting higher fuel costs and operational disruption at origin and destination. It is important to highlight that carriers are expected to adjust these surcharges down only gradually, as underlying cost pressures and network disruptions will take time to normalize.

Air Freight – Current Impact and Global Implications:

Air freight conditions remain constrained, with only partial and gradual capacity recovery.

Current conditions include:

• Reduced but slowly improving capacity to/from the Middle East
• Continued schedule volatility and last-minute changes
• Payload restrictions due to longer routings and fuel considerations
• Ongoing risk of delays and backlog recovery

While some Gulf hub capacity is being reinstated, significant volumes continue to be rerouted via alternative hubs, sustaining:

• Pressure on global air freight capacity
• Congestion at key alternative gateways
• Elevated rate levels

Middle East Airport Updates

Ocean Freight – Current Impact and Maritime Developments:

Ocean freight remains significantly disrupted, with recovery expected to be gradual and operationally complex.

Recent direct carrier feedback highlights:

• Strait of Hormuz transits remain reduced by more than 90%, with most carriers not yet resuming passage
• Carriers are maintaining a strict safety-first approach, prioritizing crew and cargo security before resuming normal routing
• Decisions on broader network normalization are expected in the coming days but remain uncertain

A critical factor impacting recovery:

• Approximately 1,000 merchant vessels remain delayed or “out of position” in the Persian Gulf
• The sequencing and repositioning of these vessels alone will take several weeks, even under stable conditions

Operationally, carriers continue to:

• Avoid high-risk areas and maintain alternative routings
• Utilize Cape of Good Hope diversions, regional hubs, and feeder networks
• Apply strict booking controls depending on trade lane and risk exposure

As a result, the market continues to experience:

• Extended transit times
• Reduced effective vessel and equipment availability
• Ongoing congestion across key hubs

Strait of Hormuz – Ongoing Risk and Managed Transit

Transit through the Strait of Hormuz remains highly restricted and conditional. While authorities have indicated that passage may be possible under certain conditions, carriers confirm that:

• Most are not resuming transit until security conditions are fully assured
• Policies vary by carrier and are subject to rapid change

This remains one of the most critical risk points for global trade and energy flows.

Cost Environment – Structural Pressure and Delayed Normalization

Cost levels across the supply chain remain elevated and are expected to remain so in the near term.

Carriers report continued increases driven by:

• Bunker and fuel costs
• War risk and insurance premiums
• Rerouting and network adjustments
• Inland transportation and handling costs

What This Means for Your Shipments

• Shipments may still face delays, diversions, or revised routing
• Backlog clearance and vessel repositioning will impact schedules in the coming weeks
• Storage and flexible routing solutions remain key mitigation tools
• Additional surcharges, including inland-related adjustments, may apply depending on routing and location

Ocean Freight – War Risk and Emergency BAF

• Carriers continue to apply War Risk Surcharges and Emergency BAFs
• Carriers maintain expanded surcharge structures globally

These reflect fuel, insurance, rerouting, and operational cost increases across the full logistics chain.

Middle East Port Updates

Inland Transportation

Inland transportation continues to be impacted globally by:

• Elevated fuel costs
• Network disruption and congestion
• Equipment and driver imbalances

Customers should expect continued adjustments in trucking, rail, and feeder-related charges. Within the Middle East in addition to rising fuel costs there is dramatic increased demand for trucks given the increase in cross border trucking involved in multi modal ocean transits, intra GCC border crossings are also congested causing delays.

Pentagon Mitigation Measures and Customer Guidance:

Pentagon remains fully mobilized globally to:

• Monitor developments in real time through direct carrier engagement
• Deploy alternative and multimodal routing solutions
• Support backlog management and recovery planning
• Secure capacity for critical shipments

Recommended customer actions:

• Share updated forecasts regularly
• Confirm bookings as early as possible
• Review insurance coverage, including war risk
• Consider flexible routing and transit options
• Plan for continued volatility in transit times and costs

We strongly recommend remaining in close contact with your Pentagon account representative to assess shipment-specific risks, routing alternatives, and cost implications. While early signs of stabilization are emerging, the situation remains highly dynamic, and recovery will take time, particularly as networks are rebalanced and backlog is cleared.

Pentagon will continue to monitor developments closely and provide further updates. Your supply chain continuity—and the safety of our people—remain our top priorities.

Your supply chain continuity—and the safety of our people—remain our top priorities.

Yours Sincerely,

Pentagon Middle East & India Management Team.

Dear Valued Customer,

Following our previous Customer Advisories, we are providing an updated consolidated view on the ongoing geopolitical escalation in the Middle East and its continued, very critical impact on global air and ocean supply chains. As widely reported in the news, the situation has further deteriorated in recent days. What initially began as a regional disruption has clearly evolved into a global supply chain crisis, affecting capacity, congestion, transit times, service reliability, and logistics costs worldwide. The environment remains highly volatile, fluid, and subject to sudden change.

Employee Safety and Operational Status:

Employee safety remains our highest priority. At this time, all Pentagon employees in the affected areas remain safe. As a precautionary measure and in line with local authority guidance, Pentagon continues to operate work-from-home arrangements in the UAE and Iraq, with our yard and warehouse teams operating on as required basis while office attendance in Oman and Qatar remains normal. Pentagon remains fully operational across the region, with teams closely following all local safety instructions and protocols.

Global Energy Impact and Carrier Surcharges (Air & Ocean):

Global energy markets remain under extreme pressure. Oil prices have risen sharply following the escalation of hostilities and ongoing uncertainty around critical maritime corridors, particularly the Strait of Hormuz. As a direct consequence, all major air and ocean carriers continue to announce and expand cost recovery measures across their global networks, including but not limited to:

• Emergency Fuel Surcharges and Emergency Bunker Adjustment Factors (EBAF)
• War Risk, Security, Congestion, and Market Disruption surcharges
• Peak-type surcharges and general rate increases
• Expanded surcharge applicability beyond traditional Middle East trade lanes

It is important to emphasize that these surcharges are not driven solely by fuel increases. They also reflect:

• Loss of effective capacity due to rerouting and longer transit times
• Higher insurance and war risk premiums
• Network imbalances, equipment shortages, and congestion
• Increased operational and security costs

These measures are global in nature and are impacting shipments worldwide, not only those moving to, from, or via the Middle East.

Air Freight – Current Impact and Global Implications:

Air freight conditions remain extremely challenging. Despite short periods of partial stabilization, capacity to and from the Middle East has tightened again, with several carriers announcing further service suspensions, reductions, or last-minute schedule changes.

Current conditions include:

• Severely constrained capacity on Middle East trade lanes
• Ongoing cancellations and short-notice schedule changes
• Payload restrictions due to longer routings and higher fuel uplift
• Elevated risk of delays, rollovers, and backlog accumulation

The continued loss of Gulf hub transit capacity—particularly impacting Asia–Europe and Asia–Americas flows—is generating significant global knock-on effects. Cargo from Southeast Asia, the Indian Subcontinent, and Oceania is increasingly being rerouted via China and Hong Kong, leading to:

• Further tightening of global air freight capacity
• Increased congestion at alternative hubs
• Sustained upward pressure on air freight rates

All major airlines have announced global Fuel Surcharge (FSC) increases, reflecting both rising fuel prices and broader market disruption.

Middle East Airport Updates

Ocean Freight – Current Impact and Maritime Developments:

Ocean freight continues to face structural and escalating challenges. Heightened security risks across key maritime corridors—including the Strait of Hormuz, Red Sea, Bab el Mandeb, and the broader Suez Canal corridor—are materially disrupting vessel operations.

• Following recent war risk insurance decisions:
• Multiple ocean carriers have suspended or restricted services to the Arabian Gulf
• Booking acceptance remains limited and subject to frequent change
• Containers already released for export stuffing may no longer be accepted
• Vessels enroute may be diverted to alternative safe ports

While ports such as Salalah have partially reopened, operations remain constrained. Congestion and slower handling continue across several regional hubs.

As carriers increasingly reroute vessels via the Cape of Good Hope, the market is experiencing:

• Significantly extended transit times
• Reduced effective vessel and equipment capacity
• Substantial additional fuel and operational costs

These effects are now creating global ripple impacts well beyond the Middle East region.

Strait of Hormuz – Ongoing Risk and Uncertainty

Iran has communicated that non-hostile vessels may transit the Strait of Hormuz under specific conditions; however, restrictions based on perceived vessel affiliation remain subject to interpretation. Given the strategic importance of the Strait—through which a significant share of global oil and LNG normally transits—any further escalation or restriction continues to represent a major risk to global trade, energy markets, and freight costs. Advance coordination, risk assessment, and contingency planning remain essential.

What This Means for Your Shipments

• Ocean shipments to the Middle East and Gulf region require explicit and updated carrier booking confirmations
• Shipments already loaded or positioned will be managed case by case to mitigate unnecessary cost exposure
• Cargo already at sea may be diverted, requiring revised onward instructions
• Temporary storage solutions can be arranged where appropriate to limit demurrage and detention
• End-of-Voyage Declarations may be issued by carriers.

Ocean Freight – War Risk and Emergency BAF

• All major ocean carriers continue to expand Emergency BAF applicability across global networks

These surcharges reflect fuel, security, insurance, rerouting, and operational cost increases and are not limited solely to Middle East routes.

Middle East Port Updates

Inland Transportation:

Sustained high energy prices are also impacting inland transportation globally. Trucking, rail, and feeder services continue to adjust fuel indices, resulting in higher first- and last-mile costs, drayage charges, and inland haulage rates across multiple regions. Within the Middle East in addition to rising fuel costs there is dramatic increased demand for trucks given the increase in

Pentagon Mitigation Measures and Customer Guidance:

Pentagon remains fully mobilized globally to:

• Monitor carrier, port, airspace, insurance, and regulatory developments in real time
• Deploy alternative routings and multimodal solutions where feasible
• Secure and prioritize capacity for critical shipments
• Support customer contingency planning through clear and timely communication

Recommended customer actions:

• Share updated shipment forecasts where possible
• Confirm bookings as early as feasible
• Review insurance coverage, including war risk provisions
• Consider flexible routing and transit time alternatives
• Factor ongoing congestion and cost volatility into planning

We strongly recommend remaining in close contact with your Pentagon account representative to review shipment-specific risks, mitigation options, routing alternatives, and potential cost implications prior to execution.

This situation remains highly fluid. Pentagon will continue to monitor developments closely and will issue further updates as conditions evolve.

Your supply chain continuity—and the safety of our people—remain our top priorities.

Yours Sincerely,

Pentagon Middle East & India Management Team.

Dear Valued Customer,

Following our previous Customer Advisories, including our update of 16 March 2026, we are issuing this communication to provide a further current status update on the evolving geopolitical situation in the Middle East and its continued global impact on air and ocean supply chains.  What began as a regional disruption has clearly developed into a global supply-chain event, impacting capacity, congestion, transit times, service reliability, and logistics costs well beyond the Middle East. The situation remains highly dynamic and continues to evolve on a daily basis.

Employee Safety and Operational Status

Employee safety remains our highest priority. At present, all Pentagon employees in the affected areas remain safe. As a precautionary measure and in line with local authority guidance, pentagon continues to operate with work-from-home arrangements in Qatar, and the UAE. Pentagon remains fully operational across the region.

The ongoing geopolitical situation in the Middle East has resulted in temporary closures of some ports and airports in the region for safety reasons, with operations restarting after all clear communicated from relevant authorities.   With airspace across the UAE and neighbouring Gulf countries only partially open, air shipments continue to be received from key origins, though at significantly reduced volumes compared to pre-crisis levels.

Air Freight – Current Impact and Global Implications

Air freight capacity across the region remains extremely constrained. Gulf carriers have gradually resumed limited freighter operations, primarily for repositioning, essential cargo, and backlog clearance, subject to regulatory approval. At the same time, several international carriers continue to suspend services to certain destinations, while national carriers operate on a reduced and highly selective basis.

As a result:

• Overall air freight capacity remains very limited
• Flight schedules and routings are subject to short-notice changes
• Delays, rollovers, and space constraints should be expected

The impact is now spreading well beyond the Middle East. Cargo flows from Southeast Asia, the Indian subcontinent, and Oceania are increasingly being rerouted via China and Hong Kong, placing additional pressure on trade lanes that were previously less affected. This has led to:

• Further tightening of capacity across the global air freight network
• Increased congestion at alternative hubs
• Continued upward pressure on rates

Global Air Freight Implications

• Reduced global capacity: Aircraft redeployments, route extensions, and service suspensions are tightening availability across key trade lanes.
• Far East–Europe & Asia–Middle East corridors: These lanes are seeing particularly strong capacity constraints.
• Rate volatility: Ongoing upward pressure on air freight rates is expected due to sustained capacity limitations.
• War risk and fuel surcharges: Airlines continue to introduce or review war risk surcharges and fuel surcharge adjustments as geopolitical risks and fuel prices remain elevated.

Customers should anticipate potential delays or cancellations, limited space availability, and short-notice rate adjustments in the coming days and weeks.

Middle East Airport Updates

Ocean Freight – Current Impact and Maritime Developments

Ocean freight continues to face more severe and structural challenges. Following recent decisions by marine insurers regarding war risk coverage, many shipping lines have stopped accepting new bookings to and from the Middle East. Expanded exclusion zones across parts of the Gulf of Oman and surrounding waters have further limited carrier operations.

As a result:

• Several shipping lines have suspended services to the Arabian Gulf
• This suspension also applies to empty containers already released for stuffing and intended for export
• Vessels currently enroute are being diverted to the next safe port of discharge

Ports in Oman, including Salalah and Sohar, were temporarily impacted following confirmed incidents. Salalah and Sohar have since reopened, though operations remain constrained. The UAE ports of Khor Fakkan and Fujairah remain operational, but congestion and slower handling times persist due to capacity limitations. There are limited feeder operations available from Sharjah and Jebel Ali to Upper Gulf Ports of King Hamad (Qatar), Bahrain, Dammam (Saudi Arabia) and Umm Qassr (Iraq), however space is very limited and subject to additional war risk and other surcharges.

Alternative routing via Saudi Arabian ports, including Jeddah and King Abdullah Port, remains feasible. However, many importers are currently delaying new orders amid uncertainty and in anticipation of potential de-escalation.

What This Means for Your Ocean Shipments:

• All ocean shipments to the Middle East and Gulf region require explicit, updated carrier booking confirmations, which remain limited and subject to change.
• Shipments already at sea may be diverted to alternative ports, where cargo will be discharged and made available for onward instructions.
• Available options may include delivery at the contingency port, onward transport by road or rail (subject to feasibility), or change of destination, all on a case-by-case basis.
• To mitigate exposure to storage, demurrage, or detention charges, Pentagon can—where appropriate and in coordination with you—collect and temporarily store cargo until departures resume.
• In certain cases, carriers may issue End of Voyage Declarations.

Alternative Air & Multimodal Routing – Ready to Operate for UAE & Qatar:

In line with our mitigation strategy, Pentagon in conjunction with JAS is ready to operate bonded air-to-road solutions into Dubai and Qatar, providing customers with a practical alternative while direct air capacity remains constrained. These solutions are fully prepared for deployment and can operate on a scheduled basis, up to three times per week, subject to shipment confirmation and operational feasibility.

Air Freight Gateways with Bonded Trucking into Dubai & Qatar:

• Dammam (Saudi Arabia): Air cargo via Dammam International Airport, with bonded trucking into Dubai or Qatar.
• Riyadh (Saudi Arabia): Air cargo via Riyadh, with bonded trucking into Dubai or Qatar.

These options are designed to support shipment continuity into Dubai and Qatar under current conditions. Transit times, availability, and costs will be assessed case by case.

Cross Border Trucking within Middle East:

To date all land borders within the GCC and Iraq are operational, however with some delays for increased security, we anticipate that there will be some congestion at key border points if this situation extends further. Truck availability is becoming an issue, and we are seeing an increase in rates for local and cross border movements.

Inland Transportation – Global Impact of situation

In addition to carrier surcharges, the sustained increase in oil prices is also impacting inland transportation costs globally. Higher fuel prices are affecting trucking, rail, and feeder movements to and from airports and seaports worldwide, leading to increased first- and last-mile costs, drayage charges, and inland haulage rates across multiple regions. These cost pressures are being observed well beyond the Middle East and are contributing to overall logistics cost escalation on a global basis.

Mitigation Measures and Customer Guidance:

Pentagon remains fully mobilized globally to:

• Monitor carrier, port, airspace, and regulatory developments in real time
• Deploy alternative routings and multimodal solutions where feasible
• Secure and prioritize available capacity for critical cargo
• Support customer contingency planning with clear, timely communication

Recommended Customer Actions:

To support continuity and planning during this period, we recommend that customers:

• Share updated shipment forecasts where possible
• Confirm bookings as early as feasible to secure limited capacity
• Review insurance coverage and any applicable regional restrictions
• Consider flexible routing and transit-time alternatives
• Factor potential port congestion into safety-stock planning

We strongly recommend remaining in close and regular contact with your Pentagon account representative for shipment-specific guidance.

As the situation continues to evolve rapidly, we remain in close coordination with our partners and local authorities. Our teams are actively adapting to changing conditions to minimize disruption and keep supply chains moving. This situation remains fluid. Pentagon will continue to monitor developments closely and will issue further updates should meaningful changes occur.

Your supply chain continuity—and the safety of our people—remain our top priorities. Your supply-chain continuity remains our top priority.

Yours Sincerely,

Pentagon Middle East & India Management Team.