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The Hormuz Playbook: How ASEAN Companies Are Rerouting Supply Chains

  • 2 days ago
  • 7 min read
Ships Transiting the Strait of Hormuz

As global supply chains become more fragmented and geopolitical competition intensifies, ASEAN businesses are strengthening supply chain resilience in ways that could shape the region's long-term economic security. Relations between Southeast Asian manufacturers and global logistics networks are increasingly evolving beyond traditional efficiency-focused models. What was primarily a cost-optimization approach is gradually becoming a broader strategic framework centered on route diversification, inventory buffers, digital visibility, and regional supply chain integration (Strait of Hormuz Disruptions: Implications for Global Trade and Development, 2026).


In February 2026, shipping traffic through the Strait of Hormuz a major maritime choke point for world energy trade was largely blocked by Iran, creating unprecedented disruptions affecting energy markets, maritime transport, and global supply chains. For ASEAN, this matters. As Southeast Asia faces growing external pressures ranging from supply chain disruptions to intensifying competition between major powers, building resilient supply chains could strengthen the region's ability to maintain economic stability and strategic flexibility (2026 Strait of Hormuz Crisis, 2026).


Increasingly, ASEAN companies appear to view supply chain resilience not simply through a national lens, but as part of a larger effort to reinforce ASEAN's collective economic position (Strait of Hormuz Disruptions: Implications for Global Trade and Development, 2026).


Key Facts


Background

Economic ties between ASEAN manufacturers and global supply networks have expanded significantly over the past two decades as regional integration accelerated. Historically, many companies optimised supply chains around efficiency and cost reduction. The major means to create supply chain resilience include diversification of partners across like-minded countries (friendshoring) and (re)shoring (Supply Chain Diversification and Industrial Policies to Strengthen Economic Security, 2026).


The disruptions of recent years including the COVID-19 pandemic, Red Sea shipping challenges, and geopolitical tensions in the Middle East have encouraged a different mindset. ASEAN leaders agreed in 2024 on a regional push to enhance supply chain connectivity, highlighting deeper intra-ASEAN trade and investment, plus stronger supply chain connectivity, as part of a drive to keep ASEAN competitive in a more fragmented global economy (Regional supply chains drive new ASEAN cooperation push, 2026).


Today, ASEAN economies are increasingly connected through regional value chains. Vietnam's rapid emergence as a manufacturing center particularly in electronics, industrial components, and export-oriented production has created new opportunities for integration with regional logistics systems and supply chain networks (Strengthening Ties: The Growing Economic and Diplomatic Partnership Between Vietnam and the UAE, 2023).


At the same time, Thailand's more advanced infrastructure, automotive sector, and regional business networks continue making it an important economic partner for Vietnam's broader industrial ambitions (Strengthening Ties: The Growing Economic and Diplomatic Partnership Between Vietnam and the UAE, 2023).


This shift reflects a larger ASEAN trend. Rather than operating purely as separate national economies competing for foreign investment, Southeast Asian states are increasingly attempting to strengthen intra-ASEAN production ecosystems capable of reducing external vulnerabilities (Strengthening Ties: The Growing Economic and Diplomatic Partnership Between Vietnam and the UAE, 2023).


In 2024, FDI inflows to ASEAN demonstrated remarkable resilience with 8.5 percent growth, reaching an impressive US$226 billion, underscasing increasing investor confidence (ASEAN Investment Report 2025, 2025).


The ASEAN View

From a Southeast Asian perspective, stronger supply chain resilience is important because it reinforces ASEAN's long-term economic security. The COVID-19 pandemic, geopolitical tensions, and disruptions in global shipping networks exposed the risks of excessive dependence on concentrated external supply chains. In response, ASEAN economies have increasingly focused on diversification, regional connectivity, and supply chain redundancy (Strengthening Ties: The Growing Economic and Diplomatic Partnership Between Vietnam and the UAE, 2023).


ASEAN companies are now becoming central to that effort. Vietnam's manufacturing growth has positioned the country as one of Southeast Asia's key export and production centers, while Thailand remains one of the region's most important industrial and logistics hubs. Together, deeper resilience-building across ASEAN countries could strengthen the region's broader role within global supply chains (Joint Statement on the Elevation to a Comprehensive Strategic Partnership Between Vietnam and Thailand, 2025).


This resilience-building is increasingly visible in:

  • electronics manufacturing,

  • automotive supply chains,

  • renewable energy investment,

  • logistics integration, and

  • digital infrastructure development.


For ASEAN policymakers, stronger supply chain resilience across member states also helps reinforce regional economic cohesion at a time of increasing global uncertainty (Vietnam, Thailand to Draft Action Plan for Implementing New Partnership, 2025).

ASEAN leaders agreed in 2024 to build disaster-preparedness into supply chains, planning for crisis operations, not reacting after the fact (Regional supply chains drive new ASEAN cooperation push, 2026).


Analysis

One of the most important developments in ASEAN supply chain strategy is the gradual shift from efficiency-focused models toward resilience-centered frameworks. This is especially visible in route diversification. Companies are increasingly working with logistics providers capable of offering multiple shipping options depending on geopolitical conditions and congestion levels (Strengthening Ties: The Growing Economic and Diplomatic Partnership Between Vietnam and the UAE, 2023).


Trade volume between Vietnam and the UAE is around $6 billion, and the new CEPA agreement aims to unlock economic potential across two primary pathways: expanding the trade of Vietnamese goods into the UAE and the broader GCC region, and encouraging UAE investment into Vietnam's growth sectors (Strengthening Ties: The Growing Economic and Diplomatic Partnership Between Vietnam and the UAE, 2023).


While alternative routes can increase transit times or costs, they provide greater flexibility during periods of disruption. The CEPA is expected to create breakthroughs in economic and trade cooperation between Vietnam and the UAE, while also acting as a driver for UAE investments in Vietnam, particularly in energy, industry, high technology, and supply chain development (New FTAs boost development of foreign markets for Vietnamese goods, 2024).


Digital transformation is also emerging as a major pillar of ASEAN supply chain resilience. ASEAN leaders agreed to reduce costs and improve cross-border efficiency, including wider use of advanced technologies in logistics and trade processes (ASEAN Leaders' Declaration on Enhancing Supply Chain Connectivity, 2024).


Advanced analytics platforms, artificial intelligence tools, and real-time tracking systems allow businesses to identify emerging risks before they escalate into major disruptions. In 2025, the EU and ASEAN held workshops in Singapore focused on digital trade and supply chain resilience (Regional supply chains drive new ASEAN cooperation push, 2026).


However, challenges remain. Building inventory buffers requires additional capital. Maintaining multiple suppliers increases operational complexity. Alternative shipping routes can raise transportation expenses. Since the conflict in Iran began, hundreds of tankers have been stranded in the Persian Gulf, leaving billions of dollars in goods stranded (The Strait of Hormuz in 8 Charts, 2026).


Infrastructure gaps also remain a challenge in parts of Southeast Asia. Port congestion, energy reliability concerns, and workforce shortages continue to affect supply chain efficiency in some markets. Traffic moving into and out of the Persian Gulf cannot easily reroute when disruptions occur, leaving hundreds of vessels and billions of dollars in goods stranded since the conflict began (Maps and Charts of the Iran Crisis, 2026).


Still, the broader trajectory is increasingly clear. ASEAN companies are moving toward a more strategic form of supply chain management centered on resilience rather than simply efficiency (Vietnam, Thailand to Draft Action Plan for Implementing New Partnership, 2025).


Bilateral non-oil trade between Vietnam and the UAE surged an impressive 8.7 percent year-on-year to reach $6.1 billion in the first half of 2024 alone, with UAE non-oil exports to Vietnam rocketing 58.4 percent over the same period (UAE-Viet Nam CEPA enters into force as bilateral trade surpasses $16.05 billion, 2026).


What Should Happen Next

ASEAN companies will likely continue expanding resilience-building across sectors considered strategically important to the region's long-term economic security. The Ministers took note of recommendations on exploring a regional oil stockpiling mechanism to strengthen ASEAN's energy resilience (Special ASEAN Economic Community Council (AECC) Meeting on the Situation in the Middle East, 2025).


Future priorities may increasingly include:

  • renewable energy integration and energy transition,

  • electronics and semiconductor supply chains,

  • digital economy collaboration,

  • logistics connectivity and transport links, and

  • industrial innovation partnerships in science, technology, and innovation.


Regional distribution hubs in Singapore, Malaysia, Thailand, and Vietnam are playing an increasingly important role in this strategy. The Ministers took note of recommendations on exploring a regional oil stockpiling mechanism to strengthen ASEAN's energy resilience (Special ASEAN Economic Community Council (AECC) Meeting on the Situation in the Middle East, 2025).


For ASEAN as a whole, the deeper significance of supply chain resilience lies in the model it may create for broader regional cooperation. As global economic fragmentation accelerates, ASEAN's long-term resilience will likely depend on how effectively member states can build stronger internal economic linkages while maintaining openness to global markets (Vietnam, Thailand to Draft Action Plan for Implementing New Partnership, 2025).


ASEAN companies appear increasingly aware of this reality. Their growing resilience-building reflects a wider regional shift toward a more interconnected, strategically coordinated, and resilient ASEAN economy (Joint Statement on the Elevation to a Comprehensive Strategic Partnership Between Vietnam and Thailand, 2025).


Higher energy, fertilizer and transport costs—including freight rates, bunker fuel prices and insurance premiums—may increase food costs and intensify cost-of-living pressures, particularly for the most vulnerable (Strait of Hormuz disruptions: Implications for global trade and development, 2026).


FAQ

Why are ASEAN companies rerouting supply chains?

Companies are seeking to improve supply chain resilience, strengthen regional manufacturing networks, and reduce vulnerability to disruptions in critical maritime chokepoints like the Strait of Hormuz.


Which sectors are driving supply chain diversification?

Manufacturing, electronics, logistics, renewable energy, digital infrastructure, energy transition, and industrial development are among the key growth areas.


Why does this matter for ASEAN?

Stronger supply chain resilience could help reinforce ASEAN's economic security, improve regional supply chains through ATIGA and ASEAN Plus FTAs, and strengthen Southeast Asia's position within the global economy.


What challenges could affect deeper resilience?

Infrastructure gaps, regulatory differences, bureaucratic delays, financing requirements, geopolitical tensions, and the inability to easily reroute traffic through blocked straits remain important long-term challenges. Access to the Strait of Hormuz, which carries roughly a quarter of global oil flows, remains contested.

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