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As attacks on shipping vessels and the instability it creates in the Strait of Hormuz continue, ripple effects are already being felt in the United States.

Sanjaya Mayadunne, associate professor of decision sciences and management information systems at 91ԭ�� (GGC), said consumers are beginning to see the first impacts.

“You’re seeing energy costs, like gas prices, go up,” he said. “There are always disruptions of some type in supply chains and supply chain managers have become increasingly good at finding creative solutions to mitigate them. However, you can’t really innovate yourself out of rising energy costs. The unpredictability further hampers effective decision making.”

The Strait of Hormuz is one of the world’s most critical shipping routes for oil. Disruptions there can cause a supply shock that affects global energy prices, which in turn hampers the movement of goods around the globe.

“When energy costs increase, that also affects the cost of producing and moving goods, whether that’s via water, land or air,” Mayadunne said. “That means shipping and trucking costs are going to go up. Large trucking corporations and ocean freight carriers can compensate to an extent because they have built in emergency fuel surcharges to their long-term shipping contracts that create a buffer. Smaller trucking carriers will get hit harder because they don’t have the leverage to absorb those higher costs and may have to take the hit directly.”

One way suppliers attempt to mitigate these disruptions is by increasing inventory.

“If you can see that energy prices, which are volatile by nature, are going to rise more than anticipated due to something like the Iran conflict, then the fastest and easiest way for suppliers to mitigate that is to build inventory,” said Mayadunne. “In fact suppliers will be able to keep prices somewhat stable for a short period of time due to existing stockpiles. Eventually, however, increased production and shipping costs will trickle down to the consumer by way of higher prices.”

Georgia could feel these impacts particularly strong. The state is home to the Port of Savannah, one of the busiest container ports in the United States and a major logistics hub that distributes goods across the Southeast and Midwest.

Mayadunne said shipping disruptions in the Strait of Hormuz can also affect agriculture. He said that 49% of global urea exports and about 30% of global ammonia exports pass through the strait and the potential closure has significantly increased fertilizer prices.

“Spring planting in Georgia has started” he said. “Those higher costs will eventually hit the food supply, so consumers will see rising prices.”

Major shipping disruptions are not unprecedented. In 2021, a container ship ran aground in the Suez Canal, blocking traffic for six days and disrupting global trade in the 2021 Suez Canal blockage.

“That blockage cut off half the world from the U.S. market,” Mayadunne said. “Had it gone on longer, one option would have been rerouting ships. While that gets products to port, it also means higher shipping costs and lost time, which is also money when it comes to supply chains.”

Despite the challenges, Mayadunne said disruptions can also lead to improvements.

“With challenges, there are opportunities,” he said. “These problems shine a light on weaknesses in supply chains. That offers supply chain experts the opportunity to innovate and strategize for greater efficiency.”