According to the head of one of world’s biggest shipping companies, the ongoing conflict with Iran will drive up transport costs that eventually reach the consumers.
Shipment Costs are Rising
Vincent Clerc said that Maersk has implemented systems to adapt charges in response to fluctuations in fuel prices. Maersk’s container shipping service is critical to transporting toys, clothes, and electronic goods worldwide.
War has brought to an end shipping in the Strait of Hormuz. Prior to the war, around 20 percent of world oil supply passed through this channel.
Security concerns led to major shipping companies avoiding the Red Sea and forcing them to make longer, more expensive journeys to Cape of Good Hope.
Global Trade
Clerc noted that disruptions in the supply chain have led to delays, especially in areas dependent on food imported from abroad. Shipping costs for a 20-foot standard container have increased by 15-20 percent. The additional shipping fees are around $200. MSC, Hapag-Lloyd and other competitors have raised their charges as well.
The oil price has risen by 20 percent since the beginning of the war to $87 per barrel.
Logistics Challenges
Land transport is unable to match the volume of sea transportation.Clerc stressed the importance of keeping food flowing efficiently in order to prevent waste and empty shelves at supermarkets.
Possible Solutions
Clerc believes that this is only a short-term fix. Clerc said that the best way to ensure safe navigation would be a diplomatic solution between Israel, the US and Iran. Some ships have turned off their tracking systems to hide their locations.
Clerc concluded regaining freedom of navigation was crucial to the flow of trade around the world.
