Name: Shipping & biotech CEOs on Strait of Hormuz supply chain turmoil
Uploaded: 2026-03-14T16:27:42.000Z
Duration: 11 min 25 s
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So we have 10 ships right now that are stuck in the upper Gulf and can't get out.

And we have numerous ships in the, in the tens of ships that are on their way to the region and for which we have had to, to have contingencies about where they're going to drop the cargo.

Over the last 15 years of my time spent in commodity and capital markets, I've not seen this level of disruption before.

The reality is that, for example, Maersk, the largest in the world, has suspended the Gulf State bookings as it waits to see how long this conflict is going to continue.

The chief executive of Merckx has said that some of his ships are stuck in the Persian Gulf.

However, the company is also avoiding Bab El Mandeb in the straits where Clerk says they can manage in the short run.

So you've got two major areas at the moment.

You've got the Straits of Hormuz where they are not going, and

you've got the Red Sea once again where they are not going.

What this means for Maersk ships is they either just basically there or they just continue.

So not surprisingly, as the war drags on, the major disruptions continue.

And we have numerous ships in the tens of ships that are on their way to the region and for which we've had to have contingencies about where they're going to drop the cargo.

They are not going to wait for the strait to reopen.

We will stage the cargo either in Oman or in Jeddah or in other places in ports where we have access to.

And then the ship will go on their way to their next assignment.

Are there any other areas that you're avoiding at the moment?

So for us, the Payal Mandeb Strait between the Arabian Sea and the Red Sea is also closed as a precaution because you will remember that for the last two years we have been subject to attack by Houthi militias in Yemen, which are a proxy of Iran.

And we feel that as much as, as the war so far has been focused on the upper Gulf, there is a risk that militia, that the proxies are being mobilized and start to take international shipping again as a, as a target.

And therefore, we have decided to reverse the reopening of the Red Sea and continue to sail the long Way around Africa.

Now this, this would be bad enough if it was just for goods and containers for the region.

But Jebel Ali and other ports there, which massive trans shipment depots, the stuff comes in, it's parcelled out and then it goes on to other destinations.

That makes this, that sort of is the ripples and makes it much worse.

I mean some of the, some of the hubs on which global trade does, does rely on are actually being affected, are being closed by the situation right now.

Is true from Jebel Ali, is true for Abu Dhabi, it's true for a few of those hubs.

And this is going to create ripple effect I think for a while as we need to see how this is going to sort itself out.

But if this was to endure, this would create I think serious congestions and serious issues across the global supply chain.

The idea of either the US government or any government providing war insurance or some form of insurance and guarantees or indeed escorting your vessels through the Strait, I've heard that that's a bit of a non starter.

Yeah, I think that, I think the most important thing to start with is to say that we have colleagues on board those ships and we will never take a solution where it's just because we have insurance but we put them in harm's way.

We're going to find that the solution is okay.

We're only going to act if we feel that the safety of our crew, the safety of our assets, the safety of our customers, cargo can be guaranteed by the solution that has been put in place.

Whether it's a negotiated solution or whether it's a military solution.

You know, there are political authorities that need to decide what is the quickest and best way to reopen the Strait.

But for us safety remain our primary concern.

And ensuring the safety of our operation, that is not something that we're going to trade on.

What do you make of the Chinese calling you and MSC in to basically complain about higher surcharges or Premier, because of extra costs, freight charges are going up and now the Chinese are piling on with their complaints to you.

I think it's important to understand that a lot of the flow of oil that comes out of the Gulf actually is serving the needs of the Arabian Peninsula, but

And therefore this energy crisis could have significant consequences on Asian Asian economies.

And it's only natural for the Chinese government to be concerned about how this is shaping and to have dialogue with some of the strategic partners that serve China.

On other segments, we don't do tankers, but on other segments and want to engage on.

How are we going to deal with some of that?

They understand that the significant cost increases we are faced with right now as a result of this situation we cannot shoulder by ourselves.

But they also want to make sure that there is fairness in the way that we deal with them, which I think is a fair concern.

And we're in constant dialogue with the Chinese government on multiple issues.

This is just one that is quite high on the agenda right now.

I mean, Maersk Giant, you're well used to crises.

This is, you faced everything at some point as a shipping company, but

this is on a scale that's almost impossible to manage.

I mean, we are clearly in uncharted territory.

I think the main concern we have more or less resolved today, the safety of our crews.

For the time being, to the best of our ability, we have solved for the cargo flows to the best of our ability.

I think the big problem that we have to solve now is with the strait being closed.

There is enough oil in the world, but there is not enough oil everywhere in the world.

There is dislocations in the market where some areas have plenty of fuel and other areas could face shortages.

And we need to be proactive in moving fuel around so that when we come to ports, we actually have the fuel that we need to keep on powering our network on.

And that is something that is completely new.

So I think for me, the only parallel that there is is Covid where something we haven't tried before either, where we need to really familiarize ourselves with completely new areas, such in this case moving fuel around the globe so that we have the right amount in the right time at the right price.

The war in Iran, not just having an impact on oil and gas prices, though they are both up, it is also threatening fertilizer supplies critical for crops and food production.

The Middle east is home to some of the world's largest fertilizer plants, and

it's a major producer of the raw materials necessary to make fertilizer.

Around 25 to 35% of the global trade in those raw materials passes through the straight of Hormuz.

But right now, pretty much nothing is passing through the Strait of Hormuz.

With us now, Chris Abbott, CEO of the biotech company Pivot Bio.

Will you just explain better than I just did about why the Persian Gulf, why the strait is so important for fertilizer coming to the United States.

So I think context is important as you, as you laid it out there.

So if we look at this over the last 15 years of my time spent in commodity and capital markets, I've not seen this level of disruption before.

So if we look at the critical inputs for us in the ag economy, about 20% of LNG, about 30%, as you mentioned, of urea, that's our nitrogen fertilizer, and

Sulfur is a key micronutrient for crops, passes through the strait.

Furthermore, the US imports this year almost 30% of its fertilizer from foreign countries.

And so you can start to imagine how does that ripple effect take shape if you start to clog up the system at a time in which we're approaching planting.

Growers in the southern US are already planting crops and many of them prior to last Friday.

The day leading into this conflict, have their nitrogen purchased.

And so what happens is you see that backup and it starts to show its ripple effect through the value chain and as we say, always hits the farmers first.

And we've seen that urea prices are up 50% since that Friday before Friday 27th February, and

in places in the northern parts of the country, it's up almost 100%.

Talk to me more about the specific timing here.

Yeah, timing's tough on a number of respects.

Number one, as I mentioned, on the planting cycle, it's hard because we're starting to plant.

So the US heading into this conflict had only bought about half of its fertilizer.

If you look at the total amount of fertilizer across all inputs.

But in this case, nitrogen is really important, was about half purchased.

Then we woke up Saturday the 28th and everybody started scrambling.

That's what led to that problem spike that I mentioned to you.

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Shipping & biotech CEOs on Strait of Hormuz supply chain turmoil

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