Shipowner Grimaldi speaks out: “Hormuz? There are no serious negotiations. Chinese fleets are at risk”

“We have never seen a geopolitical situation like this before. But goods often find a way through somehow; those who want them are willing to pay more. If routes become longer, freight rates will adjust, even for smaller vessels, because a shipowner will not undertake a voyage if the costs are not covered. Bear in mind that even if someone wants to pass through the straits, they do so without insurance.” Emanuele Grimaldi, chief executive of the family-owned group of the same name (over 130 ships), and until 22 June president of the International Chamber of Shipping (ICS), the global association of shipowners, speaks to "Il Foglio" as the conflict between the United States and Iran has resumed and yesterday Brent crude returned to $94 a barrel, around 30 per cent higher than the lows seen in early July. On Tuesday, the Strait of Hormuz saw just three commercial transits according to Kpler, whilst in the Red Sea on the same day, some oil tankers turned back following a threat by the Houthis to block Saudi shipments through the Strait of Bab el-Mandeb.

An analysis of the Grimaldi conflict also helps to understand Monday’s announcement: the Houthis’ maritime embargo against Saudi Arabia, which exports via the Red Sea: “The conflict concerns what is happening between Shia and Sunni Muslims. It appears to be a retaliatory move by Iran against the other Gulf states; Tehran wants to prevent the export of oil from other Arab countries that had bypassed the Persian Gulf by shipping via the Red Sea.”

As regards shipping routes, the CEO explains that the new developments do not affect European vessels: “I believe that almost all European fleets were already bypassing Hormuz and Suez, sailing round the Cape of Good Hope. The new development is that Arab fleets – and probably Chinese ones too – are now also at risk. But there will be a decline in traffic, and this will certainly lead to inflation, rising costs, higher fuel prices and increased emissions. Bear in mind that I consume one and a half million tonnes of oil a year: if I’m paying sixty or ninety dollars a barrel, that changes everything”. Doing the maths with his figures, one and a half million tonnes is equivalent to around 11 million barrels: an extra thirty dollars per barrel amounts to over 340 million dollars a year in additional energy costs alone. Will those costs be passed on to the goods? “Obviously: according to the indices, they have to be reflected in the costs. But we’re experimenting with alternative fuels and trying to consume as little as possible: we’re reducing speeds to some extent and using devices that cut fuel consumption. Over the last three to four years, we’ve saved at least 500,000 tonnes of oil. We’ve installed solar panels, and new ships have joined the fleet that consume half as much as the old ones.”

A ship from your fleet remained in the Strait of Hormuz for several months. Did you have any contact with Tehran? “Yes, because it was the opposing side that wouldn’t let us through. It was the Iranian embassy that contacted me; we met to ask whether it would be possible to free the ship. Permission to pass was granted following checks by the Ministry of Foreign Affairs: I’d like to thank Minister Tajani, who took a personal interest in the matter; we were also in touch on the evening the ship passed through… But until there is peace, I won’t send the vessel back, and we won’t resume the fleet of 3–6 ships we used to operate to the Gulf. They’re doing other work at the moment, and road transport is going well right now.”

The CEO remains non-committal about the future: “Since the start of the war, there have been alternating phases of hope, near-agreement and setbacks. A serious dialogue needs to be established, which is currently lacking. We need to sit down at the table. And this also applies to the other conflict – the Russian invasion of Ukraine – which has been going on for far too many years without benefiting anyone: Russia is a hugely important trading partner for Europe; it used to buy everything from us. We’ve shot ourselves in the foot.” For a valid reason, and there are certainly those who have suffered more. “I’m speaking as an economist. We’ve hurt ourselves for a reason, but we need to see who’s been hurt the most: we’re buying oil at double the price and we’re no longer selling anything. In St Petersburg, I had four or five fully loaded ships heading for Russia. Today, nothing is being shipped there.”