SeatradeMaritime: War in Iran – congestion, rerouting of trade and higher fuel prices

It was little surprise that much discussion at the Capital Link International Shipping Forum focused on the impact of the war in Iran, as well as discussing the US’ plans to rebuild its maritime industries

In a session on “Navigating Global Trade and Commerce”, moderated by Bank of America transport analyst Ken Hoexter, opinions were diverse, with panelists expressing concern about the possible duration of the present hostilities, citing deleterious impacts of higher fuel prices, congestion, and re-routing of trade. 

Panelist Joe Kramek, President and CEO of the World Shipping Council, noting “significant knock on effects….we can’t anticipate all of them” but intimated that high rates on the liner side might stay in place longer than people think.” 

Panel member Bill Rooney, a top executive with forwarder Kuehne & Nagel, noted that five-fold rate swings had occurred in the early days on Covid, and then, after an easing, were re-kindled when the Suez Canal had shut down in the wake of the Ever Given grounding. He said that “we are nowhere near those levels of increase…” presently (Day 10 of the war). Toward the end of the panel, Rooney noted, ominously, “If things don’t settle down within three or four weeks, things could get materially worse.”

Keynote Speaker, the newly appointed US Maritime Administrator (MARAD) Stephen Carmel said: “The world that we operate in today is different, with geopolitical competition intensifying…energy markets are de-stabilizing, sea-lanes are becoming contested, and supply chains are threatened.” 

Continuing, he said, that: “Potential adversaries are increasing pursuing strategies that are affecting the system…’system destruction warfare’- it’s designed to disrupt networks, and disrupt supply chains, and disrupt the infrastructures that allow economies and militaries to function. That is actually what is happening, on a small scale, at Iran right now…in the environment resilience becomes strategic destruction.” 

He went on to say the “efficiency always matters, but today resilience [defined as the ability of a system to absorb shocks without strategic failure] must matter just as much- resilience requires capacity, and capacity requires investment.”

He talked about the need for implementing a system approach with resilience built in; “If we to rebuild maritime capacity in the United States,  we must rebuild the entire maritime ecosystem,” he said, after detailing that bringing in the systematic approach means that the entire maritime enterprise must be recalibrated “Building ships at scale means building for the international market…and that means building shipyards that can do it…it also means financing at scale.” 

Turning to the States recently released Maritime Action Plan (MAP), he said, “That is the opportunity before us…the MAP provides the strategy, but the strategy only matters if it’s executed…execution requires participation from the entire maritime ecosystem- shipyards, maritime laborers, technology developers and capital. Federal policy can only create the architecture, the maritime industry…must be the ones who build the system.”  

He closed by saying, “The United States did not become a maritime power because we built a few great ships and a few great ports (with New York being called out)…we became a maritime power because we built a system that worked.”