The CEO of logistics firm Flexport, Ryan Petersen, anticipated a return to order in global supply chains for 2026, but a new war involving the U.S., Israel, and Iran has reinstated chaos. This conflict has severely disrupted Middle Eastern shipping routes, closing the recently reopened Red Sea and making the Strait of Hormuz perilous, causing ships to cluster at ports and forcing costly detours around Africa.
The disruptions are creating major logistical challenges, such as cargo being stranded at alternate ports and accruing storage fees, with all increased costs ultimately passed to consumers. Petersen warns that beyond container shipping, global oil shortages due to the conflict could trigger severe energy price inflation, representing an even greater economic threat.
The main topics covered are the impact of war on global supply chains, Middle Eastern shipping route disruptions, rising costs and logistical challenges for businesses, and the potential for broader economic inflation and energy shortages.
After years of chaos in the global supply chain, Ryan Petersen, CEO of the logistics company Flexport, felt 2026 might offer some modicum of order. The pandemic was firmly in the rearview mirror. Red Sea shipping channels—which had been closed due to the Gaza crisis—were finally opening. The Supreme Court struck down many of Donald Trump’s tariffs, and some Flexport customers were hoping for refunds. Petersen could finally concentrate on what he had identified as the company’s major push of the year—embracing the latest AI technologies to make Flexport run more efficiently.
Then the United States and Israel went to war with Iran. Chaos is back, and it’s going to cost us all.
I spoke with Petersen this week to get a sense of how bad things are in the global supply chain—and what this means for Flexport’s business.
While the Iran war will wreak havoc on Flexport’s customers, it’s also an opportunity for the company to prove its worth. After all, its business is built on routing and tracking goods with cloud technology, improvising when necessary to get stuff to its destination. Those are necessary skills when the Strait of Hormuz is perilous—several ships were attacked there this week—and major Middle East ports are under fire.
Port countries like Kuwait, Qatar, and the United Arab Emirates are central hubs for goods in transit. One large shipping company told Petersen that it won’t load containers on ships routed through some of the major ports of the Middle East. If a voyage is underway, the container must be dropped off at the next port of call. “Now you as an importer or a company that’s shipping cargo suddenly have a container in France or Tangier, and it’s on you to figure out what to do about this,” says Petersen. Doing nothing means that the cargo racks up higher and higher storage fees. All those costs ultimately get passed on to consumers.
Petersen tells me that only recently did major shipping companies resume moving cargo through the Red Sea, which had been deemed a hazard due to Houthi attacks. Now that’s come to a standstill because of the war. The alternative route has been a long detour around Africa. “It drives up the price quite a bit, because a voyage costs more, but more importantly, it reduces supply: Ships do fewer voyages per year,” says Petersen. “There was a lot of hope that returning through the Red Sea would increase capacity in the market and reduce prices, but now that’s off the table.”
Petersen visualizes the situation for me by firing up a product called Atlas, which tracks the movement of container vessels in real time. Coincidentally, Flexport launched Atlas two days before the war began. Petersen cautioned me that not all the positions are accurate, because many companies have turned off their vessels’ transponders—or even used high-tech methods to spoof their locations to avoid attacks. Still, it’s obvious that traffic in the Middle East is moribund. Petersen waves his cursor over a cluster of ships congregating around the UAE port Jebel Ali, which is near the Strait of Hormuz. It looks like the traffic jam at the beginning of La La Land. “These ships have been stagnant in this area,” he says. “You wouldn’t normally see so many clustered here.”
That’s not the worst of it, he adds. Flexport isn’t heavily involved in the oil trade, but Petersen thinks that energy shortages will have a bigger negative impact than whatever is in those containers stuck in Tangier. “The US is self-sufficient, but globally there’s not enough oil to go around—you’re gonna have shortages, and then you will see a crazy parabolic rise in the price.”
Petersen is not terribly optimistic about what happens to the supply chain if the war goes on. “They need to get this solved,” he says. “Besides oil, the thing I’m really worried about is inflation.” Petersen notes that the president has said the US might insure all ships going through the strait, costing possibly hundreds of billions of dollars. Also, he says, “we have to print more money to cover these tariff bills, as we have to refund $175 billion.” (Petersen believes there’s a 99 percent chance the US refunds that money to importers. But not to the consumers who paid more for goods.)
Petersen of course is committed to helping his customers through the mess. But what frustrates him is how the crisis pulls him away from his AI strategy goals. One of the things that Flexport does for customers is provide customs brokerage, handling the complicated documentation required to move goods internationally. Flexport previously had an automated system that filled out the paperwork with around a 5 percent error rate, after which a compliance team double-checked the documents, lowering the error rate to 1.8 percent. Last November, Flexport began using a cutting-edge “AI auditor.” The error rate dropped to 0.2 percent. “We had this wake-up call,” he says. “It’s like, wait, it’s not that AI is cheaper—it’s just way better.”
Petersen himself has become somewhat of an AI nut. “I just want to spend all day building tech and applying AI, and end up neglecting other things that matter, like my wife and kids. But now I’m getting pulled into other stuff,” he says. Like a broken supply chain. The looming threat of high inflation. And maybe an endless war. I’d rather vibe code, too.
Meridiano
