The uncertainty surrounding the Strait of Hormuz has exposed the fragility of Kenya’s manufacturing sector, with industry players now concerned over supply chain disruptions and escalating freight costs.
This, they say has exposed local industries to higher production costs and shortages of raw material with consumers exposed to costlier goods amid a hit on Kenyan exports.
According to the Kenya Association of Manufacturers (KAM), the uncertainty surrounding the strategic waterway, which began in February, has disrupted the flow of raw materials and fuel supplies that are critical to Kenya’s industrial production.
This has forced firms to grapple with delays, rising costs and shrinking competitiveness.
A survey conducted by KAM has revealed that 78.6 per cent of manufacturers have been affected by the disruptions.
More than 92 per cent reported delays in receiving shipments, with average lead times doubling from 28 days to nearly 60 days.
About 35.7 per cent of manufacturers reported sea freight increases exceeding 30 per cent.
Shipping a standard 20-foot container, which previously cost between $1,000 (Sh129,600) and $2,000 (Sh259,200), rose to between $3,000 (Sh388,800 ) and more than $4,000 (Sh518,400 ) on some routes.
Freight charges for 40-foot containers climbed from below $2,000 to as much as $10,000 (Sh 1.3 million) in certain cases.
“The surge was driven by war-risk surcharges imposed by shipping lines, vessel diversions and sharply higher marine insurance premiums as operators sought to mitigate risks associated with cargo movement through the Gulf region,” KAM chief executive, Tobias Alando, said.
Kenya relies heavily on petroleum imports from Gulf nations including Saudi Arabia and the United Arab Emirates, currently being imported through a government-to-government deal.
As fears of supply disruptions mounted, global oil prices surged, pushing up fuel costs and increasing transport and production expenses across virtually every sector of the economy.
The highest oil price per barrel following the outbreak of the US-Iran conflict in late February 2026 was recorded in late April, when the international Brent crude benchmark peaked at $126.41 per barrel. This marked the highest level for crude oil since March 2022.
“The Strait of Hormuz may be only 167 kilometres long, but it carries nearly a fifth of the world’s traded oil and significant volumes of industrial cargo. When tensions escalated, the effects were immediately felt across Kenya’s economy.Manufacturers bore the brunt of the disruption.”
Industries dependent on imported inputs such as aluminium, industrial chemicals, plastics, paper, glass and specialised machinery components found themselves facing unprecedented uncertainty as shipping companies altered routes, insurers increased premiums and cargo movements slowed.
For many businesses, particularly small and medium-sized manufacturers, the crisis created an additional financial burden as suppliers abandoned traditional credit arrangements and demanded full upfront payments before dispatching goods.
“The result has been mounting pressure on cash flow at a time when firms were already dealing with increased production costs and delayed deliveries,” Alando noted.
The disruption also threatened Kenya’s export earnings. The country exports goods worth approximately $48 million (Sh6.2 billion) annually to Iran, mainly tea and coffee.
More broadly, the Middle East accounts for roughly 18 per cent of Kenya’s exports, valued at around $1.5 billion (Sh194.4 billion).
Higher shipping costs and delivery delays have reduced the competitiveness of Kenyan products in regional and international markets, KAM says, making it harder for exporters to meet contractual obligations and delivery schedules.
Industry players warn that prolonged disruptions in strategic global trade routes can contribute to inflationary pressures by increasing the cost of imported fuel and industrial inputs, which eventually feed into consumer prices.
The crisis has reignited calls for Kenya to accelerate industrial self-sufficiency and reduce reliance on distant supply chains.
KAM argues that expanding local production of industrial inputs, strengthening regional value chains under the African Continental Free Trade Area (AfCFTA), and improving logistics infrastructure could help cushion manufacturers against future global shocks.
The association is also advocating for reductions in the Import Declaration Fee (IDF) and Railway Development Levy (RDL) on industrial inputs, alongside a predictable tax regime to improve competitiveness.
“The lesson from the Strait of Hormuz is clear,” said Alando, “Resilience must be built before the next crisis occurs. Kenya’s manufacturing sector needs stronger local supply chains, more regional sourcing and policies that support industrial growth if it is to withstand future disruptions.”
