Unboxing Logistics The Middle East Shipping Crisis With Sal Mercogliano From What’s Going On With Shipping? - Unboxing Logistics Ep. 84
Just a few weeks ago, the tense situation in the Middle East reached a boiling point when the U.S. and Israel launched an attack on Iran.
Now, as the effects of the conflict ripple across the world, everyone has the same question: How will this affect global trade?
Sal Mercogliano, maritime shipping expert and host of the YouTube channel What’s Going On With Shipping?, joins Lori to help answer that question. Sal shares a nuanced analysis of how the crisis has already affected shipping and what will happen going forward.
How has the conflict in the Middle East affected shipping?
To understand why the war in Iran will have such a major impact on shipping, you first need to understand choke points. Sal describes them as “narrow little areas where [ocean] traffic funnels together.” And one of the biggest choke points in the world is the Strait of Hormuz, where the Persian Gulf meets the Indian Ocean.
Sal explains, “Since the United States and Israel struck Iran … shipping has stopped going through.” And unfortunately, “There's no shortcut here. There's no … ‘Let's go around the Persian Gulf.’ You can't. You've got to go through the strait.”
This bottleneck will result in higher costs to businesses and consumers across the world.
What will happen if the conflict continues?
While much of our oil comes from the Middle East, there are other sources. According to Sal, we’ll probably begin relying more heavily on places like the United States, Nigeria, and Venezuela for oil.
But that solution comes with its own challenges.
Sal explains, “You have to take natural gas and liquefy it, which means you put it into a ship by cooling it. … There's only a finite number of those ships. You have to go further distances, and there's a set amount you can ship because there's finite [resources] available.”
What will happen when the conflict ends?
Even when the conflict ends, Sal expects that shipping will be disrupted.
He compares it to driving down the highway: “All of a sudden, traffic comes to a stop for some reason … because there was an accident there an hour ago and it just hasn't cleared up yet. For almost every day of an incident, it takes three to four to clear it out.”
While we’re waiting for things to stabilize, Sal recommends that businesses stay informed about global events and look for ways to incorporate more flexibility into their shipping operations.
Links
- Connect with Sal on LinkedIn: https://www.linkedin.com/in/salvatore-mercogliano-ph-d-what-s-going-on-with-shipping-95437729/
- Check out What’s Going On With Shipping? on YouTube: https://www.youtube.com/@wgowshipping