Logistics CEO: Hormuz rerouting will raise consumer prices

The head of DP World is sounding the alarm about inflation pressures from a lengthy disruption to Mideast trade, warning that rewiring supply chains to avoid the Strait of Hormuz will eventually boost consumer prices far beyond the Persian Gulf region. DP World Group CEO Yuvraj Narayan said the Dubai-based port and logistics giant’s new truck networks are moving more than 3,000 containers a day for the nearly 12,000 companies operating in the free zone near its Jebel Ali port. Normally, the terminals there would handle about 40,000 containers a day. The diversions are necessary because vessels that used to arrive regularly carrying as many as 24,000 containers are still wary of transiting Hormuz, where the attacks on the merchant fleet may worsen if U.S. military strikes resume after the midterm elections on Nov. 3. DP World’s shift to slower, lower-volume logistics on land from the efficiencies of ocean shipping is proving expensive — four or five times more costly in some instances, Narayan said. Cargo owners can only manage those through tighter margins and inventory buffers for so long before they’ll look to charge more. “You can’t absorb that indefinitely,” he said in written responses to questions from Bloomberg News. “The longer disruption persists, the greater the likelihood that higher costs feed through into prices, at a time when households are already living with elevated prices and central banks are trying to return inflation to target.” Narayan took the helm of DP World two weeks before the war started. He’s now drawing attention to an issue overshadowed by concerns…

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