This article first appeared in The Edge Malaysia Weekly on April 13, 2026 - April 19, 2026

MALAYSIA’S logistics sector is beginning to feel the strain from the war in Iran, as exporters adopt a cautious stance and delay shipments amid heightened uncertainty.

Just two months ago, the outlook had been improving. Freight rates were expected to ease in 2026 due to excess container capacity and hopes of a reopening of Red Sea routes following disruptions caused by Houthi attacks since 2023, a trend that would have favoured shippers.

Those expectations have since unravelled.

A widening conflict involving the US, Israel and Iran has driven a sharp spike in energy prices, with Brent crude climbing above US$98 per barrel last Thursday, up from around US$70 prior to the outbreak on Feb 28. Concerns over disruptions in the Strait of Hormuz, a critical global energy choke point, have further rattled markets and pushed shipping and air freight costs higher.

For now, logistics players are partially shielded by government diesel subsidies, which have helped contain operating costs despite a surge in global fuel prices.

Express delivery and transport firms such as Swift Haulage Bhd (KL:SWIFT), Tiong Nam Logistics Holdings Bhd (KL:TNLOGIS) and GDEX Bhd (KL:GDEX) say the immediate impact remains manageable, though pressure is building in certain areas.

Gasoline and diesel prices have more than doubled since the Iran war broke out. Domestically, Prime Minister Datuk Seri Anwar Ibrahim says Malaysia has sufficient fuel supply to meet local consumption needs until June.

“Overall, the impact has been relatively limited as diesel for our prime movers continues to be subsidised by the government,” Swift Haulage executive director and group CEO Loo Yong Hui tells The Edge. The company is the country’s largest haulier by 20-foot equivalent unit (TEU) volume, operating 1,600 prime movers, 100 small trucks and 6,000 cargo trailers.

Still, some cost pressures are emerging. Warehouse operations and equipment running on commercial diesel such as forklifts and reach stackers have seen marginal increases. Meanwhile, higher oil prices are expected to ripple through to maintenance costs, including tyres, lubricants and spare parts, according to Loo.

To offset rising expenses, logistics companies are increasingly passing costs on to customers. Swift Haulage has already raised cross-border transport rates, particularly in markets like Thailand, where fuel subsidies are absent. Its contracts also include fuel adjustment mechanisms, allowing further cost pass-through if subsidies are reduced.

“While fuel costs in Malaysia remain stable under the subsidy mechanism, our contracts incorporate fuel adjustment factors based on diesel price movements and distance. This allows us to pass through additional costs should subsidies be revised or removed,” he says.

The company’s prime movers and small trucks are eligible for subsidised fuel, and diesel accounts for roughly 22% of Swift Haulage’s operating costs.

On the demand side, early cracks are beginning to show.

Loo says some export customers have adopted a wait-and-see approach and delayed shipments, while exports to the Middle East have declined. At the same time, demand from chain stores has increased as consumers stock up on essentials.

“In warehousing, facilities near ports are filling up quickly as some businesses hold back decisions until the situation stabilises,” he notes.

Despite the mixed demand picture, Swift Haulage does not expect to scale back operations in the near term, though visibility beyond the current quarter remains limited.

“We do not foresee a direct impact on operations from fuel prices at this stage. However, demand for our services could be affected depending on consumption and trading patterns,” Loo says.

Swift Haulage reported a 31% decline in net profit to RM27.39 million for the financial year ended Dec 31, 2025 (FY2025), from RM39.82 million a year earlier, largely due to the absence of a one-off gain of RM12.9 million from the disposal of a 12.5% stake in Global Vision Logistics Sdn Bhd. It expects the impact in 1QFY2026 to be largely neutral, though visibility for the second quarter remains uncertain amid “developments around fuel subsidies and broader volume trends”, he says.

Tiong Nam managing director Ong Yoong Nyock says the group’s operating costs remain stable despite the conflict.

“We are part of the government’s diesel subsidy programme, which protects our fleet from international oil price fluctuations,” he tells The Edge.

“Our fleet complies with the government’s requirements for the diesel subsidy,” he says, adding that fuel historically accounts for about 4% of its total operating costs.

Tiong Nam operates more than 2,000 vehicles.

The group has not noticed adverse fluctuations in demand.

“Demand stays neutral because the majority of our clients provide daily essentials to consumers,” says Ong.

Operationally, its service contracts are based on transparent pass-through mechanisms.

“When fuel costs or third-party vendor rates exceed thresholds, these adjustments are passed through. This ensures our margins remain protected while providing pricing clarity for our clients,” he says.

Tiong Nam has imposed fuel surcharges as a standard component of its pricing. “We employ a responsive and proportionate mechanism that only activates when procurement costs rise. This ensures a fair cost-sharing model,” says Ong.

In the near term, Ong does not anticipate a need to scale back operations or fleet capacity. “A significant portion of our logistics and warehousing revenue comes from long-term partnerships with clients in essential areas such as food and beverage and fast-moving consumer goods. We are committed to supporting our customers and providing the operational stability for uninterrupted supply chains. We do not expect significant impact on the group’s financial performance.”

Tiong Nam swung to a net profit of RM15.22 million in the nine months ended Dec 31, 2025 (9MFY2026), compared with a net loss of RM1.42 million a year earlier, driven by improved performance and operating efficiency in logistics and warehousing services.

The impact of the war is more pronounced in air logistics, where fuel accounts for a larger share of operating costs.

GDEX managing director and group CEO Teong Teck Lean says airline charges for routes between Peninsular Malaysia and Sabah and Sarawak have risen by nearly 30%, forcing the company to raise delivery prices on those lanes.

The group is also seeing softer demand in certain segments as supply chain disruptions ripple through the economy.

“Consumers may ship slightly less, but they are still shopping. E-commerce activity continues to grow, but customers are becoming more price-sensitive, while demand for higher-priced goods without promotions has softened,” he observes.

As fuel prices climb, GDEX is under increasing pressure to pass on the increase in costs.

“Not all transport companies have subsidy fleet cards. Some will ask us for additional payment for their shipments. For Peninsular Malaysia, we are passing on the additional cost for bulky items as they take up more space. For normal shipments, while we have not increased prices, we are assessing how to pass on some of the costs.

“A major impact of this war is that costs have risen significantly. There is no way we can absorb all of it. We have to pass some of these costs back to customers. At the same time, we have to be very conscious of customer requirements,” says Teong.

Labour constraints are also emerging.

“Service levels are also being affected. If salaries for frontline workers are not increased, it will be difficult to hire drivers. We are studying how to provide additional incentives to attract more workers and improve service for our customers,” Teong says.

Malaysia’s express parcel delivery market — already grappling with intense competition from foreign e-commerce entrants — has been consolidating, with players such as Nationwide Express Holdings Bhd, Pgeon Delivery and Flash Express Malaysia shutting down operations.

A key risk for the sector is the potential removal of diesel subsidies. Subsidised diesel is currently priced at RM2.15 per litre, compared with market rates of RM6.72 per litre.

Without subsidies, fuel costs could triple as a share of operating expenses — from about 10% to as much as 30%, according to Teong.

“That would have a tremendous impact,” he warns.

To mitigate longer-term risks, GDEX, which operates a fleet of 1,400 vehicles, is accelerating its transition to electric vehicles (EVs) for shorter-haul deliveries.

“We have placed orders for 20 units of 20-tonne EVs on top of the 10 we ordered earlier. We are also opening up a charging station at our headquarters in Petaling Jaya to the public.

“We think that in the long term, the government cannot continue to subsidise diesel if the fuel price remains at current levels. So on our part, we will invest more in EVs,” he emphasises, noting the group has already converted its forklifts to EVs as part of efforts to reduce a reliance on fossil fuels.

Teong also expects the Iran war to weigh on the group’s performance in the second quarter ending June 30, 2026. The group posted a smaller net loss of RM1.72 million in FY2025, compared with RM1.86 million a year earlier.

“It’s natural for people to become more cautious about spending. Some projects may be deferred for now. For example, many construction companies will be affected as they rely on industrial fuel. When business activity slows, it affects everyone, including us,” he says.

Still, logistics companies remain wary of diesel supply. The Middle East conflict has begun to strain petrol station operators, which are facing higher working capital requirements to maintain fuel inventories amid rising unsubsidised prices.

“With petrol stations needing significantly more cash to maintain fuel supply, disruptions have emerged at smaller operators. In such cases, we may have to buy diesel with cash from stations that do not accept subsidy fleet cards. While this is a minor issue, it still adds to our costs,” an industry source says.

The sector picture is not uniformly negative as maritime operators are better insulated. Shipping firms typically employ bunker adjustment factors (BAF) — variable surcharges that allow fuel cost fluctuations to be passed through to customers — helping protect margins.

Ooi Lean Hin, managing director of MTT Shipping and Logistics Bhd, says the financial impact of the Iran conflict has been more pronounced for air cargo operators than for maritime players, given the more discretionary nature of air travel.

“If you look at what we are carrying from Peninsular Malaysia to Sabah and Sarawak, or within the region, it is largely essential goods or input used to produce them. That tells you this shipping industry is very defensive,” he says.

MTT Shipping is able to pass on higher costs through BAF mechanisms.

“Bunker is always a variable factor. We can have a base freight, which normally has a three-month validity. But bunker is sitting outside. It protects us in terms of variations in oil prices. It’s a monthly revision,” Ooi says.

Drewry’s Intra-Asia Container Index, a weighted average of spot rates across 18 key regional trade routes, climbed 57% in the first week of April to US$865 per 40-foot container, from US$552 before the onset of the Iran conflict.

Westports Holdings Bhd (KL:WPRTS) group managing director Datuk Eddie Lee Mun Tat says the port operator is closely monitoring market developments, noting that it is premature to draw any conclusions at this stage. “We are adopting a more cautious approach and will not accept discharge containers into our yard unless there is a clear plan for their subsequent shipment out from our port. We cannot afford to let our yard be congested.”

According to a March 25 report by RHB Investment Research, direct exposure to the Middle East conflict is minimal, as only 5% of Westports’ container volume is exposed to the region, despite Asia-Europe routes accounting for 16% of overall throughput. The report notes: “Management confirmed that all eight services calling from the Middle East remain active. Notably, some liners are diverting cargo at alternative hubs like Westports due to Strait of Hormuz limits.”

The port operator is also rejecting containers without clear final destinations, maintaining yard density at 70% to 80% to avoid congestion. Two new warehouses, scheduled to commence operations in April and June, will add capacity of 500,000 TEUs per year.

Rising fuel costs, however, could weigh on Westports’ earnings.

“Fuel cost remains the group’s third-largest operating expenses at 17% as at end-December 2025,” says RHB.

RHB estimates that every 10% increase in fuel costs reduces Westports’ FY2026 earnings by 1%, though the duration of the conflict will ultimately dictate the severity of this impact.

Kenanga Research is maintaining a “neutral” stance on the seaport and logistics sector, noting that the impact of higher fuel prices, exacerbated by reduced traffic through the Strait of Hormuz, has so far been limited.

“Logistics players are insulated by the rising diesel price by using subsidy fleet cards to pump at a fixed price of RM2.15 per litre, while seaport operators cushioned the use of unsubsidised diesel with the rising containers storage income on expected port congestion from the reduced shipping traffic to the Middle East.

“Nevertheless, the domestic logistics sector fared better as Malaysia is a beneficiary of the booming e-commerce and trade diversion on US-China trade tensions,” it said in an April 8 report. 

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