Retail supply chains are still dealing with the fallout from the Iran war and disruption in the Strait of Hormuz.
We sat down with Advanced Supply Chain UK and European Sales Director Stuart Greenfield to find out what it could mean for prices, deliveries and festive stock.
Q: If the Strait of Hormuz reopens in April, what will the first stage of supply chain recovery look like?
A: “The first stage of reopening the Strait of Hormuz will involve clearing the ships stuck in the Strait. Stranded vessels need to move first to clear shipping routes, which will then allow maritime traffic to resume and start the process of getting back to some level of normality.”
Q: How long could it take for retail supply chains to return to normal after the Iran war disruption?
A: “Retail supply chains are likely to rebound in two stages. The first is a near-term adjustment, where it’ll take around 3-5 months for transportation costs and schedules to return to close to the levels seen before the start of the Iran war in February.
“The second stage of recovery is likely to take much longer and is difficult to predict, because the near-term rebound will happen when retailers are preparing for peak 2026. Supply chains will start to return to a more even keel at a time when there’s seasonally high demand for shipping and freight. This could mean it takes much longer for retail supply chains to stabilise following the shocks caused by the Iran war.”
Q: Will recovery happen in clear stages, and what can retailers expect in each phase?
A: “Looking at how supply chains have recovered from recent conflicts, including the invasion of Ukraine in 2022 and the start of Houthi attacks in the Red Sea in 2023, does suggest retail supply chains will go through a two-stage adjustment, once the Strait of Hormuz is opened.
“The first stage is likely to see transportation costs start to decline over a period of months, with the gradual restoration of shipping and transportation schedules. This period is all about clearing backlogs caused by the disruption and taking the first steps towards stability. Confidence starts to return to markets and supply chain focus generally shifts from short-term, reactive and corrective measures to longer-term planning.
“The second stage of normalisation typically happens over a longer period, when retail supply chains resume and sustain regular transportation routes and there’s less volatility in operating costs. This phase of stabilisation is often defined by greater levels of predictability in terms of cost control, route planning and overall stock inventory management.”
Q: Could higher shipping and energy costs still affect Christmas prices, even if routes reopen soon?
A: “It looks increasingly possible that the impacts of the Iran war could lead to higher prices this Christmas, because even if the Strait of Hormuz opens in the coming days or weeks, it could still take retail supply chains 3-5 months to adjust to the shocks.
“Retailers will be ordering Christmas stock during a period when transportation prices are still inflated by the impacts of the war. What we are seeing is retailers aiming to mitigate these costs to keep retail selling prices low and protect consumers. Supply chain strategies are prioritising alternative route planning and optimising freight capacity to create efficiencies, while also eliminating wastage from supply chains.”
Q: How quickly could freight rates and transport costs fall once vessels start moving again?
A: “It’s possible that transportation costs will start to fall in around three months and that they return close to pre-war levels in around five months.”
Q: What backlog problems could ports, carriers and retailers face after the Strait reopens?
A: “The initial challenge is dealing with a bottleneck of vessels and freight at ports, which is likely to be caused by clearing the Strait of stranded vessels.
“The recovery of shipping routes could also be impacted by clearing mines and other security risks in the Strait of Hormuz, delaying the restoration of shipping schedules.
“There’s also a knock-on effect on road transportation, as clearing backlogs of stranded vessels could see a sudden surge in demand to clear ports of containers.”
Q: What steps are retailers taking now to reduce disruption and protect margins?
A: “Retailers have already begun diversifying transportation modes and routes, opting for alternatives such as air freight. They are also interrogating loading strategies, so that they can find ways of moving more goods per square foot of vehicle space. These solutions can help to manage supply chain costs and improve resilience against disruption and delays.”
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