finance
Maersk CEO Says Iran War Adds $500 Million in Monthly Shipping Costs
The chief executive of the company that ships 14% of global containerized goods reported that the conflict has increased the firm's energy expenses by $500 million per month. One vessel crossed the Strait of Hormuz under U.S. military protection while six others remain stranded in the Gulf. The company suspended two key routes in March as oil prices rose above $100 per barrel.
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The chief executive of Maersk said the ongoing war in Iran has added $500 million in monthly costs to the company, which ships about 14% of global containerized goods. The executive told CNBC on Thursday that the conflict created disruptions to flows in and around the Middle East as well as to energy supplies.
The company operates in a highly energy-intensive industry and expects the added costs to affect its results in the second and third quarters. The Strait of Hormuz, through which one-fifth of the world's oil passes, has remained effectively closed for the duration of the conflict.
Oil prices stood at about $105 per barrel on Friday, up from around $70 before the war. Mixed signals about possible peace talks between the U.S. and Iran have kept markets uncertain about when the passage might reopen. The company suspended two key vessel crossings in March linking the Far East to the Middle East and the Middle East to Europe.
On Thursday the executive confirmed that one commercial vessel had passed through the Strait of Hormuz with U.S. military protection. Six ships remain stranded in the Gulf.
Increased energy expenses have added $500 million per month. The executive said the company is taking steps to reduce costs but must pass some of the increases to customers because the amount is too large to absorb internally. Customers range from small businesses to multinational corporations.
The developments come as the company reported first-quarter revenue of $13 billion, down 2.6% from the prior year. Operating profit fell nearly 75% to $340 million. The company maintained its full-year operating profit guidance, which ranges from a loss of $1.5 billion to a profit of $1 billion.
