Iran war cost will be passed to consumers, shipping giant boss tells BBC

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.

However, it is hard to shift the same volume by land as by sea and Clerc said that while there was enough capacity to keep the most important goods moving a lot of exports like petrochemicals are "going to have to take the back seat for a while".

Governments including the US and France have suggested that naval escorts could be a way to open the waterways again.

Clerc said a better option would be for the US, Israel and Iran to come to "some kind of deal" to restore trade routes in the Middle East.

While a naval escort might be a "temporary reprieve" to get ships moving, Clerc stressed he was not willing to put staff at risk.

"You're very close from the Iranian coastline, you don't have a lot of time to react so you would need a significant presence from the Navy to be able to provide a shield all the way through," he said.

"I personally have a hard time seeing that this is the permanent solution to the situation because the traffic is very important [and] the strait is very narrow"

Data from the logistics firm Kuehne+Nagel Seaexplorer suggests 132 ships remained stuck in the Gulf as of Monday, 9 March.

The exact number is hard to confirm with reports suggesting that some vessels have turned off their transponders to hide their locations.

Meanwhile, it was only a few weeks ago that major shipping lines such as Maersk started a phased return to the Red Sea route.

Threats of Houthi attacks on ships linked to the Hamas-Israel conflict led companies to stop using the passage for two years.

Any ships there or in the Strait of Hormuz are vulnerable.

Clerc said: "Ultimately we need to get back to something where freedom of navigation and peaceful navigation is restored."

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