The Iran war throws global shipping into chaos

Years after Chaos in the global supply chain Ryan Petersen, CEO of logistics company Flexport, felt that 2026 might offer a measure of order. The pandemic was firmly in the rearview mirror. Shipping channels in the Red Sea – which had been closed due to the Gaza crisis – have finally begun to appear. The Supreme Court struck down several tariffs imposed by Donald Trump, and some Flexport customers were hoping for refunds. Petersen was finally able to focus on what he described as the company’s main push for the year: adopting the latest artificial intelligence technologies to make Flexport run more efficiently.

Then the United States and Israel went to war with Iran. Chaos is back, and it will cost us all.

I spoke with Petersen this week to find out just how bad things are in the global supply chain, and what it means for Flexport’s business.

While the Iran war will wreak havoc on Flexport’s customers, it is also an opportunity for the company to prove its value. After all, its business is built on routing and tracking goods using cloud technology, improvising when necessary to get things to their destination. These are essential skills when the Strait of Hormuz is so perilous — several ships were attacked there this week — and major ports in the Middle East are under fire.

Port states such as Kuwait, Qatar and the United Arab Emirates are central hubs for goods in transit. One major shipping company told Petersen it will no longer load containers on ships passing through some major ports in the Middle East. If the voyage is underway, the container must be offloaded at the next port of call. “Now, as an importer or a company that ships goods, you suddenly have a container in France or Tangiers, and it’s on you to figure out what to do about it,” says Petersen. Doing nothing means the merchandise racks up higher and higher storage fees. All these costs are ultimately passed on to consumers.

Petersen told me that major shipping companies have recently resumed transporting goods through the Red Sea, which had been considered dangerous due to Houthi attacks. Now it has stopped because of the war. The alternative route was a long detour around Africa. “It drives the price up a little, because the trip costs more, but more importantly it reduces supply: ships make fewer trips per year,” says Petersen. “There was great hope that returning via the Red Sea would increase market capacity and lower prices, but now that is off the table.”

Petersen envisions the situation for me by launching a product called Atlas, which tracks the movement of container ships in real time. Coincidentally, Flexport launched the Atlas two days before the war began. Petersen warned me that not all locations are accurate, because many companies have turned off their ships’ transponders — or even used high-tech methods to spoof their locations to avoid attacks. However, it is clear that traffic in the Middle East is dying. Petersen waves his pointer at a group of ships clustered around the UAE port of Jebel Ali, located near the Strait of Hormuz. There seems to be a traffic jam at the beginning La la land. “These ships were stagnating in this area,” he says. “You wouldn’t normally see this many gatherings here.”

But that’s not the worst of it, he adds. Flexport is not heavily involved in oil trading, but Petersen believes the energy shortage will have a bigger negative impact than anything in those containers stuck in Tangier. “The United States is self-sufficient, but globally there is not enough oil, you will have shortages, and then you will see prices go crazy.”