Since the end of February 2026, the situation in the Gulf region has continued to escalate, the conflict between the United States, Israel and Iran has spread to the Persian Gulf, and the Strait of Hormuz, the global shipping chokepoint, has been effectively blocked.
This geopolitical crisis has directly impacted the logistics and fulfillment system, the core lifeblood of cross-border e-commerce in the Middle East. Coupled with the tightening of compliance policies such as VAT withholding and electronic invoices in Saudi Arabia and the United Arab Emirates, the entire industry has fallen into short-term violent shocks.
As of the morning of April 8, Beijing time, tensions in the Middle East that have lasted for more than five weeks have reached a critical turning point. The United States and Iran have agreed to a ceasefire and started negotiations.
The specific content and results of the negotiations are yet to be known. What changes will it bring to the development of cross-border e-commerce in the Middle East?
From logistics paralysis and skyrocketing costs to order differentiation and seller clearance, cross-border e-commerce in the Middle East is undergoing a profound reshuffle driven by war, and the long-term development logic of the industry is gradually becoming clear during the crisis.
The logistics system is under pressure
The Strait of Hormuz carries nearly one-third of the world’s oil trade and is also the core channel for cross-border e-commerce shipping in the Middle East. After the tension, the world’s major shipping companies have adjusted their strategies, suspended bookings at some ports in the Persian Gulf, and were forced to bypass the Cape of Good Hope, which directly led to overall pressure on the logistics system.
Industry freight forwarding and insurance agencies recently disclosed that the shipping time for ocean shipping is 15-20 days longer than normal, and the overall logistics cost has increased by 30%-70%.
War insurance premiums have experienced an explosive rise, rising sharply from the conventional 0.25% to more than 50%. Some shipping companies have levied an additional war surcharge of US$1,500-4,000 per box, directly devouring all profits of low-margin products.
The air transport sector has also been hit hard. The capacity of core aviation hubs such as Dubai has declined, air transport prices have increased by more than 50%, logistics companies such as FedEx have suspended collection and delivery services in some Gulf countries, and the direct shipping model of light and small items has basically failed.
The end fulfillment process is even worse. The delivery of some Amazon warehouses in the Middle East is restricted, and the overall delivery time of the platform is significantly extended.
According to third-party platform data, the timeliness of some lines on Amazon has reached 35-45 days, Temu about 20 days, and SHEIN has been extended from the original 5-8 days to 8-10 days. The order cancellation rate and refund rate have soared, and seller performance indicators are facing severe challenges.
Flexport CEO pointed out that the conflict in the Middle East has reduced global air cargo capacity by approximately 18%.
For cross-border e-commerce sellers who have long relied on air freight to send small packages to the Gulf market, the surge in logistics costs is directly eroding profit margins.
Differentiation between orders and consumption
Security concerns, increased inflation and currency depreciation caused by geopolitical conflicts have directly weakened the purchasing power and consumption confidence of Middle Eastern consumers, and cross-border e-commerce orders have shown an overall downward trend.
Among them, non-essential goods were most obviously affected, with orders for categories such as 3C electronics, fashion and beauty, home decoration, and non-essential home appliances declining significantly, with some categories nearly halved.
It is worth noting that consumer demand shows obvious structural differentiation: demand for food, daily necessities, medical consumables and other rigid categories is relatively stable, and some security and energy storage equipment have even experienced a slight increase in demand in response to the epidemic.
At the same time, consumer behavior has undergone significant changes. Affected by the unstable situation, offline travel has decreased and the frequency of online shopping has increased. However, consumption decisions have become more cautious, showing the characteristics of “only buying essential needs and postponing non-essentials”.
Coinciding with the Ramadan Sale, the golden sales period for cross-border e-commerce in the Middle East, a large number of sellers prepared goods in advance but were unable to fulfill the contracts on time due to logistics delays, missing the sales window, and further intensifying inventory backlog and capital turnover pressure.
Cost and compliance are strangled, and low-margin sellers are accelerating the liquidation
The cost pressure brought by the war in the Gulf and the new compliance policies in the Middle East have formed a double squeeze, further compressing the profit margins of cross-border e-commerce in the Middle East, and accelerating the industry’s liquidation.
Logistics costs, war insurance premiums, and fuel surcharges have increased simultaneously, with a comprehensive increase of 30%-100%. Coupled with the increase in raw material costs caused by Brent crude oil prices breaking through highs, sellers’ operating costs have increased significantly.
In terms of compliance, Saudi Arabia will officially implement the VAT withholding policy in 2026. The Saudi platform will compulsorily deduct 15% of the value-added tax. At the same time, electronic invoices (Fatoorah) will be fully implemented, and non-compliant sellers will face fines.
For sellers who rely on gray customs clearance and lack compliance qualifications, the inability to make input deductions results in repeated tax payments, further compressing profit margins.
In this context, small and medium-sized sellers with low gross profit, pure distribution, and reliance on direct mail model face greater profit challenges.
The industry generally believes that small and medium-sized sellers who lack compliance capabilities, lack of local warehouse layout, and lack of stable supply chains will be eliminated at an accelerated pace, and the industry competition landscape will be concentrated at the top.
Looking for opportunities in crisis, which cross-border sellers can survive?
Despite the short-term impact of the Gulf War, the long-term growth logic of Middle East e-commerce has not changed – Saudi Arabia’s “Vision 2030” and the UAE’s “Digital Economic Strategy” continue to advance. The region’s Internet penetration rate of more than 95%, a large young population and high per capita purchasing power still provide broad long-term development space for cross-border e-commerce.
Under the crisis, the industry is accelerating its restructuring and forming new development trends and survival logic.
From the perspective of the supply chain, the advantages of the direct mail model have been significantly weakened. Local warehouse + localized fulfillment has become an industry consensus. Sellers who have deployed local warehouses in Saudi Arabia and the United Arab Emirates in advance have gained a competitive advantage in the crisis with stable timeliness and contract fulfillment capabilities.
In the future, logistics diversification will become mainstream. The combined model of “full container shipping + overseas warehouses + local distribution”, as well as land transportation channels in surrounding ports such as Oman, will become an important choice for sellers to avoid the risks of a single channel.
From the perspective of market competition, the industry will completely bid farewell to barbaric growth, and compliance, localization, and branding will become core competitiveness.
Local VAT, local logistics, local payment, and local teams will become standard for sellers entering the Middle East market, and the platform will further strengthen compliance control and local performance requirements.
At the same time, sellers will pay more attention to market diversification, reduce dependence on a single country in the Gulf, expand to relatively stable markets such as Egypt, Jordan, and Oman, and reduce the impact of geopolitical risks.
From the perspective of category selection, rigid demand, resistance to cycles, and high repurchase have become core considerations for sellers. Categories such as food, daily necessities, medical consumables, and energy storage equipment will continue to maintain relatively stable demand, and branded and differentiated products will stand out from the competition.
The short-term pain caused by the war in the Gulf is forcing the Middle East cross-border e-commerce industry to upgrade its structure.
This crisis is not the end of the industry, but the starting point for raising the industry threshold and reshaping the pattern.
In the future, only sellers that adhere to compliant operations, deepen localization layout, build a strong and resilient supply chain, and focus on categories with high demand and repurchase can gain a firm foothold in the Middle East cross-border e-commerce market and seize long-term growth dividends.
