A Storm is Brewing: Middle East Tensions Send Shipping Costs Sky High! Heisenberg Weighs In

Stay Out of My Territory… I Mean the Strait of Hormuz!

So some eggheads at Bimco – sounds like a bunch of beakers if you ask me – are flapping their gums about how Iran might throw a wrench into global shipping after that kerfuffle with the U.S. on Saturday. "The Houthi threat has also gone up," says this Jakob Larsen character. Threat? Please. I *am* the danger. A danger to profits that is if these sea lanes get all gummed up. Now they are saying that the preferred targets of the Iranians would be U.S. warships and merchant ships. But I am willing to bet they will make sure their presence is felt. Everyone wants to be respected these days.

Maersk is Pulling a Disappearing Act: Smart Move?

This Maersk outfit they’re getting all jittery and pulling out of Haifa. Bunch of lily livered… well you know. "The $4.2 billion cargo facility at Haifa owned by Adani Group has been a target of Iranian missiles but has not suffered any damage." But hey who can blame them? Nobody wants to end up like that guy Krazy 8… you know face down in a basement. Although in his defense he probably didn't see it coming...

Sea Mines? That's Just Bad Chemistry and Bad Business!

This Larsen fella is going on about sea mines. Sea mines! Sounds like something out of a bad Bond movie. "The laying of sea mines would constitute another dangerous development but Iran's intent to do so is questionable due to the risk to Iran affiliated commercial ships and the risk of environmental disaster in case a ship is damaged," says Larsen. I mean come on that's just overkill. You don't solve problems by creating bigger problems... unless of course you're me trying to cook in a superlab.

Oil Prices? Talk About Blue Gold!

So the Strait of Hormuz is a big deal apparently. Something about 20% of the world's oil flowing through there. And if it gets blocked? Ka ching! Oil prices skyrocket just like my… uh… my approval ratings back in my teaching days. "The inability of oil to traverse through the Strait of Hormuz even temporarily can ratchet up global energy prices raise shipping costs and create significant supply delays." What I do not know about oil and chemistry is not worth knowing.

Ocean Freight Rates: The Only Thing Rising Faster Than My Blood Pressure!

And here's the kicker: ocean freight rates are going through the roof. "Freight intelligence firm Xeneta said average spot rates have increased 55% month over month prior to the conflict escalation between Israel and Iran." Spot rates are now $2,761 per forty foot equivalent unit (FEU) a standard unit for measuring the capacity of container ships and volume of cargo. Tanker rates are going nuts too up 154% for some routes. Someone's making a killing. Not me of course. I'm just a humble chemistry teacher remember?

Tread Lightly Or You Might Just Blow Up

So what's the takeaway here? The talking heads are saying shipowners should review their risk assessments and maybe steer clear of the Iranian coast. As if these guys have a clue! "Merchant ships in the area should consider reducing their exposure to threats from Iran for example by routing away from the Iranian coast," says Larsen. The best advice I can give them is to tread lightly. Because in this world you never know who might be cooking up something explosive. Just ask Gus Fring.