The price of a ship changing course

War-risk insurance is only one line in the bill. A reroute can also consume time, fuel, port capacity and working capital.

A tanker captain receives two instructions: continue toward the scheduled port, or turn away and spend another week at sea. Behind the choice are not only missiles or mines, but a chain of contracts. The shipowner must decide whether the voyage is safe. The insurer must decide whether to cover it, at what terms and for how long. The charterer may owe an extra premium. The cargo owner needs the goods delivered before storage, credit and downstream schedules run out.

When a vessel changes course, the price is not a single “war surcharge.” It is a bundle: insurance, fuel, vessel time, missed port windows, cargo delay and financing tied up while the shipment is in transit. Some costs appear on an invoice; others arrive later as demurrage, a stockout, a higher inventory bill or a changed freight rate.

What war-risk insurance actually covers

Marine cover is a set of policies, not one blanket guarantee. Hull and machinery insurance covers physical loss or damage to the ship, subject to its wording. Standard hull policies commonly exclude war perils, which can be bought back through separate war-risk cover. Cargo owners arrange their own cargo insurance; that policy’s war and strikes cover may be separate or subject to different terms. Protection and indemnity (P&I) insurance covers shipowner liabilities to others—such as injury, collision or pollution—but war liabilities are often excluded or handled through separate arrangements. Gard, “War” shipowner cover; Gard, “The Middle East conflict: Frequently Asked Questions”

For a ship on an annual war-risk policy, entering an insurer’s listed or conditional area may require advance notice and an additional premium, often called an AP or breach premium. This is commonly calculated as a percentage of the ship’s declared insured value for a specified voyage or period. It is not a tax, not a universal price, and not automatically the cargo owner’s bill: the charterparty determines which party pays, while the cargo policy and sale contract allocate other exposures. The International Union of Marine Insurance (IUMI) says war cover in the Persian Gulf and Red Sea remained available in April 2026, often by agreement for a single voyage, with insurers regularly reassessing whether and how to offer it. IUMI, “Marine insurers reaffirm their commitment to supporting trade in the Middle East,” 14 April 2026

“Listed area” is a market signal, not a war declaration. The Joint War Committee of the Lloyd’s and London company markets maintains areas that concern underwriters; a listing can prompt notice and an AP under the wording of a policy. The London Market Association says the committee itself does not set rates; pricing is negotiated by individual underwriters and brokers. A listing does not establish that an attack occurred, prove who carried it out, or set a single tariff for every ship. Insurers can assess the vessel’s flag, ownership, management, cargo, route, port calls, security arrangements and timing. One ship may get a quote; another may face a higher price, a narrower exclusion, or no offer on the same day. Lloyd’s Market Association, Joint War Committee overview; IUA, Joint War Committee risk list; IUMI, Middle East marine insurance statement, April 2026

That variability explains why a reported “spot premium” should be handled carefully. A broker’s indicative quote may be based on a particular ship, route, insurer and validity window. It is not proof that all ships pay that price, or that the premium stayed in force after conditions changed. A reported rate should identify what it measures—hull value or cargo value, one voyage or a time period, the geographic area and the quotation date. Without those units, a percentage is more drama than information.

An attack report is different evidence. On 16 September 2026, the International Maritime Organization (IMO) called on states to stop attacks on merchant ships and seafarers. It reported fatalities in recent Red Sea attacks and said casualty counts in the Black Sea were difficult to verify. That is an official warning about maritime danger, not an insurance quote. Nor does the existence of a premium identify an attacker: underwriters price exposure, not legal responsibility. IMO, “Stop attacking merchant ships and seafarers,” 16 September 2026

The route can cost more than the premium

If the ship avoids a chokepoint, it may have to sail around a continent. UN Trade and Development (UNCTAD) reports that vessels diverted from the Red Sea have taken weeks rather than days to pass around the Cape of Good Hope. In its 2025 Review of Maritime Transport, UNCTAD found that rerouting increased ton-miles by 5.9% in 2024 even though cargo volumes grew far less; it also noted that Suez traffic in May 2025 remained around 70% below 2023 levels. A detour lengthens a voyage, reduces the number of trips a ship can make in a year, and shifts arrival bunches to other ports. UNCTAD, Review of Maritime Transport 2025, 24 September 2025

The cost compounds. The vessel burns more fuel and spends more days with crew and capital at sea. A late arrival can miss its berth slot; several late arrivals can crowd a port already handling rerouted traffic. Cargo waits for unloading, customs and inland transport. Businesses may need to hold more inventory or borrow for longer. If a shipment backs a letter of credit or trade-finance facility, a delay can also prolong the time before documents are accepted and payment is released. Shipping insurance is a visible surcharge; the schedule and working-capital costs can be just as important.

The World Bank’s 6 October 2026 regional update connected the Middle East conflict and Hormuz closure with higher shipping costs, import pressures and supply-chain strain. That report covers MENAAP, not Kenya’s costs, but it shows how route disruption reaches importers through prices and delays beyond the immediate conflict zone. World Bank, Middle East Conflict Further Weakens Regional Outlook, 6 October 2026

Here is a deliberately simple illustration—not a market quote or actual contract. Assume a tanker’s insured hull value is US$100 million. If a hypothetical insurer quotes an additional war-risk premium of 0.50% of hull value for one transit, the AP is US$500,000: US$100 million × 0.005. Now assume rerouting adds 10 sailing days, and the ship’s incremental fuel and operating cost is estimated at US$65,000 per day. That adds US$650,000, for an illustrative combined ship-level cost of US$1.15 million before cargo delay, port charges or financing. Every input is an assumption chosen to show the arithmetic; actual premiums, values, routes and daily costs vary, and the 0.50% is not a report of a current quote.

The choice is commercial as well as physical: pay to cross a higher-risk area, reroute, wait, or refuse the voyage. An owner may reject the trip even when cover is available if the premium and crew risk outweigh the freight revenue. A charterer may pay the AP under the charterparty but not control the cargo contract. A cargo insurer may cover physical loss while excluding delay. The correct question is not “Is the ship insured?” but “Which interest is insured, against which peril, for which route and time, and who bears the uncovered delay?”

Why Kenya feels the delay

For Kenya, seaborne trade is not an abstract global statistic. The Port of Mombasa is a gateway for Kenya and hinterland markets across East and Central Africa. The Kenya Ports Authority says Mombasa handled 45.45 million tonnes of cargo in 2025, including 15.88 million tonnes of transit cargo. KPA’s terminals and inland container depots link ocean arrivals to roads, rail and neighbouring states. Rerouting can therefore affect not just a ship’s owner but the schedule of goods moving inland through a shared corridor. Kenya Ports Authority, 2025 port performance, published 2026; Kenya Ports Authority, Port of Mombasa

Petroleum shows the link from ship to household. The Kenya National Bureau of Statistics reports that petroleum product imports rose 12.2% to 5.5 million tonnes in 2025. EPRA describes the petroleum import infrastructure: products primarily arrive through the Kipevu Oil Terminal, whose pipelines connect to storage and distribution systems; the agency lists 1.129 million cubic metres of bulk storage at Mombasa facilities in its fiscal-year 2024/25 report. These are import and capacity figures, not a claim about how many days of usable national stock were available on any given date. KNBS, Economic Survey 2026; EPRA, Energy and Petroleum Statistics Report, FY 2024/25

The supply chain has cushions. Kenya has port storage, inland depots, pipelines, road and rail links; a larger port throughput can provide redundancy if one berth or route is delayed. Regional ports and alternative suppliers can help where the product, contract, terminal and inland route match. The World Bank’s 2026 analysis also warns that available slack in global container capacity helped absorb earlier Suez diversions, limiting freight-rate pressure at that time. Rerouting does not automatically mean shortage or runaway prices. The constraint is that a spare route or tank is not a perfect substitute: product grades, vessel availability, storage access, financing and onward distribution all have to line up. World Bank, Trade Watch, 21 April 2026

For fuel-importing economies, the effects can arrive before cargo runs out. A longer voyage ties up stock, delays replenishment, raises the cost of financing inventories and exposes the buyer to more volatile freight and insurance terms. A government can smooth a short interruption with stocks and alternative procurement. It cannot instantly create tanker capacity or erase the extra voyage. A port can be busy and still be short of the one product needed inland.

The premium is a forecast, not a verdict

UNCTAD’s September 2026 warning to the UN Security Council is that repeated disruption can turn higher logistics costs into a structural drag, especially for developing economies dependent on a limited number of transit corridors and ports. But maritime capacity also adapts: fleets re-route, ports win transshipment business, insurers continue to offer cover, and storage and inland links buy time. Those responses can soften a shock, although they do not make danger costless. UNCTAD, statement to the Security Council on safe seas, 17 September 2026

The cleanest reading of an insurance increase is modest: an underwriter sees a higher expected cost of loss, uncertainty, or capital tied up in that specific voyage. It does not prove an attack is imminent, that every ship faces the same odds, or that the insurer knows who is responsible for a past incident. A premium is neither a casualty count nor a political judgment. It is a price attached to a contract under uncertainty.

Evidence cutoff: 24 October 2026. The worked example is illustrative only and is not an actual quote, policy or shipment cost.

Sources

• IMO, “Stop attacking merchant ships and seafarers,” 16 September 2026
• UNCTAD, Review of Maritime Transport 2025
• UNCTAD, Security Council statement on safe seas, 17 September 2026
• World Bank, Trade Watch, 21 April 2026
• World Bank, Middle East Conflict Further Weakens Regional Outlook, 6 October 2026
• IUMI, marine insurers and Middle East cover, 14 April 2026
• IUMI, statement on Middle East marine insurance, 14 April 2026
• Lloyd’s Market Association, Joint War Committee overview
• International Underwriting Association, Joint War Committee risk list
• Gard, shipowner war-risk coverage
• Gard, Middle East conflict insurance FAQs
• KNBS, Economic Survey 2026
• EPRA, Energy and Petroleum Statistics Report, FY 2024/25
• Kenya Ports Authority, Port of Mombasa 2025 performance

A ship anchored inside Mombasa Port on 31 July 2015. File photograph credited to the Ministry of East African Affairs, Commerce and Tourism; it does not depict a current delay or insurance incident. Credit: MEAACT Photo / Stuart Price. Image source · Public Domain Mark 1.0; released by the author on Flickr