INTERVIEW: Middle East war may slow green logistics near term, but speed long-term transition: DHL

The Middle East conflict may cause some companies to delay decarbonization efforts as freight costs, war-risk surcharges and transit disruptions mount, but it could ultimately accelerate a broader shift toward less dependence on fossil fuels, Niki Frank, CEO of DHL Global Forwarding Asia Pacific, said in an interview with Platts, part of S&P Global Energy.

Some DHL customers are reassessing sustainability spending as the latest disruption adds new costs to already strained supply chains, Frank said at the sidelines of Singapore Maritime Week 2026.

"Decarbonization still in many cases means additional cost for the supply chains," Frank said. "Now, with costs increasing due to fuel surcharges and war-risk surcharges, and longer transit times, some customers are rethinking their efforts or reprioritizing their efforts."

However, the same crisis could strengthen the long-term case for alternative fuels and diversified sourcing, he said, noting renewed awareness of the global reliance on oil and gas from the Middle East.

"If people take a longer-term perspective and say, I really want to reduce my dependency on fossil fuels ... then shifting to alternative energy sources, using new energy solutions, including sustainable fuels, can become a longer-term catalyst."

Singapore has emerged as a hub where companies are beginning decarbonization pilots, Frank added, noting the trading hub's ecosystem for sustainable aviation fuel and sustainable marine fuels.

"Singapore is one of those locations where we see customers that say, I want to use my Singapore trade flows to start working on that (decarbonization) journey," he said.

While adoption remains gradual, many customers prefer to begin with selected trade lanes or product categories before scaling up across broader supply chains, according to Frank.

Nonetheless, he observed that this reflects a broader shift in customer sentiment across Asia-Pacific, despite geopolitical disruptions, in which companies are becoming more proactive on sustainability after years of resistance to added costs.

Trade rerouting, not retreat

Active rerouting has become a business priority immediately since the conflict disrupted freight markets, said Frank.

The Middle Eastern carriers previously accounted for around 20% of air cargo capacity from Southeast Asia into Europe and parts of North America, he said. "That (capacity) was basically wiped off because no Middle Eastern airlines were flying anymore."

"Dealing with these short-term challenges and then finding solutions for our customers to keep their cargo moving – that's the first priority right now," said Frank.

At sea, some cargoes were discharged in India, Sri Lanka, or at origin ports, forcing urgent rerouting. Shipping lines have increasingly shifted calls toward alternative gateways in Oman and Saudi Arabia, with overland trucking links used to reach final destinations in Gulf markets, he said.

"We are at a stage of adapting to the current norms and establishing new regular routings, together with the carrier partners, on the shipping lines as well as on the airline side," said Frank.

Frank said the latest conflict has reinforced a trend already underway: global trade is continuing to expand, but routes, sourcing patterns, and logistics networks are being tested on their resilience.

Since the pandemic, the industry has been learning "to be more agile and flexible, to find alternative routings, and to use alternative modes of transport," he said, adding that DHL has been used to the "agility" to adjust to congestion, choke points, and to find workarounds.

Amid concerns over a collapse in globalization, he said during a panel discussion at the conference: "Trade is well and alive... We're seeing reconfiguration of supply chains towards multi-sourcing ... different routings, different trade lanes emerging."

DHL is seeing the rise of "China plus X" strategies, with companies building additional manufacturing and sourcing bases across markets such as Vietnam, Malaysia, Mexico, and Turkey to reduce concentration risk, he said.

The companies best positioned in the current geopolitical environment are those that began diversification plans years earlier, Frank added.