Increased transport costs driven by the conflict in Iran will be passed on to consumers, the boss of the world’s second biggest shipping company has said.
Vincent Clerc, chief executive of Maersk, told the BBC that the Danish shipping giant has mechanisms in place so if fuel prices go up or down, that is passed on to the company’s customers.
“So what it means is that ultimately, in this case, these increases will pass to our customers and will pass on to the consumers.”
Since the US-Israel war with Iran began, oil prices have soared close to $120 a barrel before easing, but at $87 crude is nearly 20% higher than it was before hostilities broke out.
Maersk is dominated by its container shipping arm, which plays a vital role in moving goods such as toys, clothing and electronics around the world.
The war has brought transportation through the vital Strait of Hormuz route to a standstill. Before the conflict, around a fifth of global oil supplies travelled through the route.
Iranian government spokesperson Fatemeh Mohajerani justified the blockade by saying the country needed to maximise “all resources” while in a state of war.
At the same time, the world’s biggest shipping lines are also avoiding passage through the Red Sea because of security threats.
It is causing widespread disruption to the global economy with firms such as Maersk sending its vessels on longer – and more expensive – voyages around the Cape of Good Hope.
China’s government has already balked at the higher cost of moving goods. On Tuesday, the country’s transport ministry said it had called in executives from Maersk and another firm to discuss their “international shipping operations”.
Clerc said the extra costs work out at around $200 for a standard 20ft shipping container which can mean “anything from a 15% to a 20% increase on some of the freight cost”.
Maersk’s rivals MSC and Hapag-Lloyd have also increased charges.
Clerc said the disruption has had a “profound impact” on Maersk, with many customers not receiving regular deliveries and is “extremely disruptive” in a region that is heavily reliant on imported food.
It means there are a lot of logistical challenges to “keep the food moving” and making sure it “continues to be on the shelves of supermarkets” rather than going to waste as it sits on ships or in ports.
Asked if he was concerned about product shortages, he said “we’ve seen a fantastic reaction” with land bridges and trucks trying to keep things on the go.