Fertiglobe trucks fertiliser around Hormuz as prices offset 60% logistics premium

Fertiglobe is trucking phosphate and urea shipments across the Arabian Peninsula to bypass the Strait of Hormuz, absorbing logistics costs 40-60% above normal shipping in a bet that elevated global fertiliser prices will sustain the premium indefinitely.

The Abu Dhabi-based producer—the world’s largest seaborne exporter of urea and ammonia with 6.6 million tons annual capacity—confirmed the rerouting strategy as commercial traffic through Hormuz remains at roughly 5% of pre-conflict levels. CEO Ahmed El Hoshy told The National the company is moving product via truck to alternative ports outside the strait, then shipping to distant markets including Australia and Nigeria—routes never attempted before February’s Iran-US escalation.

The economics work because urea prices have surged. Spot rates hit $725.60 per ton in March 2026, a 53.7% month-on-month jump and the highest level in four years, according to the World Bank. Though prices pulled back to $585 per ton by May 1—still 24.4% above year-ago levels per Trading Economics—the premium over pre-crisis baselines ($200-300 per ton) remains wide enough to absorb the transport penalty. In Indian markets, Fertiglobe products climbed from roughly $500 per ton in late March to over $900 by early May.

The rerouting exposes the structural tension in Gulf fertiliser exports. Nearly one-third of global seaborne fertiliser trade—roughly 16 million tons annually—normally passes through Hormuz, per the World Bank. The Persian Gulf accounts for 43% of seaborne urea exports, 44% of sulfur, and over 25% of ammonia, according to North Dakota State University trade data. When the strait closes, that volume is physically trapped—unlike the 2022 Russia-Ukraine crisis, where Black Sea grain could reroute via Poland and Romania, Gulf phosphate has no maritime alternative.

Overland corridors emerge as durable infrastructure

Fertiglobe’s truck routes likely leverage new freight corridors Saudi Arabia and Iraq opened in March and April 2026. Arab News reported that Saudi Arabia Railways launched five new rail and TIR freight routes designed to bypass Hormuz, connecting Gulf producers to Red Sea and Mediterranean ports. The shift from ad-hoc crisis response to planned infrastructure suggests regional governments expect chokepoint risk to persist beyond any near-term ceasefire.

The economic logic is clear. If a 40-60% logistics premium costs an additional $200-250 per ton, but the global price floor has shifted from $300 to $600, producers capture margin even after absorbing the penalty. Import-dependent economies face the inverse calculus: Brazil, which imports over 80% of its fertilisers, and the United States, which sources 17% of urea and 20% of phosphate from Gulf exporters, must either pay the premium or accept reduced agricultural output. The World Bank projects global fertiliser prices will rise over 30% in 2026, closing the year at $675 per ton for urea—60% above 2025 levels.

Price premium creates winners and losers

The fertiliser arbitrage is reshaping commodity flows and geopolitical leverage. Saudi Arabia and UAE producers gain strategic optionality: they can serve Gulf-dependent markets at elevated prices or redirect supply to higher-margin buyers in Asia and Latin America. Import-dependent developing economies—particularly in sub-Saharan Africa and South Asia—face a binary choice between paying the premium or rationing agricultural inputs, with direct consequences for food inflation and political stability.

Spot phosphate prices reflect the squeeze. Diammonium phosphate (DAP) reached $880 per ton in late April Egyptian tenders, with monoammonium phosphate (MAP) at $894-930 per ton and urea at $852 FOB, per Argus Media. These figures are 50-80% above pre-crisis baselines and roughly double the levels seen during the 2022 Black Sea disruption, when alternative supply from North America and North Africa capped price spikes.

What to watch

Track whether Saudi and Iraqi corridor volumes scale beyond Fertiglobe. If additional Gulf producers shift to overland logistics, the infrastructure becomes permanent—reducing Hormuz’s strategic leverage even after a ceasefire. Monitor fertiliser import data for Brazil, India, and sub-Saharan Africa: sustained high prices will force substitution toward domestic nitrogen production or reduced application rates, with lagged effects on crop yields visible in Q3-Q4 2026 harvests.

Watch for Chinese and Russian phosphate exports. If Gulf supply remains constrained, China—which accounts for roughly 30% of global phosphate production but restricts exports to support domestic agriculture—may ease quotas to capture arbitrage opportunities. Russian producers, less affected by Hormuz but facing sanctions-related logistics challenges, could redirect Black Sea flows to fill Gulf shortfalls in European and African markets.

The Hormuz ceasefire remains fragile. Any resumption of hostilities or tightening of the US counter-blockade would push urea back toward $700-750 per ton, making overland rerouting not just viable but the only option. The longer the disruption persists, the more Gulf producers will invest in alternative corridors—and the less leverage Iran retains over global fertiliser markets.