Lots More on the Seaborne Chaos Around the Strait of Hormuz

Tracy Alloway (0:00)

There's a little bit of debate over Anton's own naval experience, but we can get into that. But Anton, you have some naval experience, sort of.

Anton Posner (0:08)

No, you're teeing it up for Margo to make fun of me now, because I was just a reservist. So I fully embrace the fact that I do not have grand military experience. Okay, I served, I was in the reserves, I put on the uniform, I wish it could still fit.

Tracy Alloway (0:23)

I heard you played a lot of tennis.

Anton Posner (0:26)

I played tennis on the road to Spain, on a NATO exercise, I'll have you know, Tracy. It was a NATO military exercise, and I don't think I would have.

Margo Brock (0:36)

Your exercise was tennis. For your exercise today, you played tennis.

Anton Posner (0:40)

By the way, I'd like to say that Perez de la Frontera was fantastic for wine and sherry.

Tracy Alloway (0:49)

Joe, I want a T-shirt that says Ruthless Utility Maximizer.

Anton Posner (0:52)

Black gold.

Tracy Alloway (0:53)

Let's talk about losers.

Margo Brock (0:55)

Who cares?

Tracy Alloway (0:55)

I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the US.

Joe Weisenthal (1:01)

Skulls Unlimited.

Tracy Alloway (1:03)

What's the ticker for that?

Joe Weisenthal (1:04)

No, I think that in a couple of years, the AI will do a really good job of making the Odd Lots podcast.

Tracy Alloway (1:10)

How do I get more popular and successful?

Joe Weisenthal (1:13)

One day, that person will have the mandate of heaven. We do have the perfect guest.

Tracy Alloway (1:19)

You're listening to Lots More, where we catch up with friends about what's going on right now.

Joe Weisenthal (1:24)

Because even when the Odd Lots is over, there's always Lots More.

Tracy Alloway (1:27)

We really do have the perfect guest. I feel a little bit stupid.

Joe Weisenthal (1:36)

Go on.

Tracy Alloway (1:37)

But on Monday, obviously, the war-

Joe Weisenthal (1:39)

Wait, you're just now for the first time? No, just kidding.

Tracy Alloway (1:42)

Thanks, Joe, thank you. Obviously, the war with Iran happened on the weekend and is still happening. And on Monday, I woke up and I was thinking about energy markets and geopolitics in the Middle East. And I was trying to think of someone who would be really good to talk about shipping. And I'm embarrassed to say, it took me a full 24 hours to remember that we actually have marine chaos experts basically on speed dial at the moment.

Joe Weisenthal (2:10)

Well, it's perfect because we are experiencing marine chaos, obviously. We're recording this March 4th. Yesterday, Trump posted on Truth Social talking about the US actually playing a role as sort of an insurer of last resort. Because one of the things that we've been seeing is like setting aside the sort of logistical ability to get goods out of the region, get whatever out of the region. There's obviously the question of can you get insurance? And we know that prices are soaring, et cetera. Insurance costs getting too high could end trade flows regardless of the actual logistics on the ground.

Tracy Alloway (2:45)

Well, not just insurance premium is getting too high, but insurance being pulled all together.

Joe Weisenthal (2:49)

Just getting pulled all together. That's right. So they are their own entity that's sort of like separate from national. There's nations, and then there's insurers, and they have quite a bit of say over what moves and when and where.

Tracy Alloway (3:01)

Well, all of this just confirms my long-running suspicion, as you know, that insurers actually control the world in a very underappreciated way. We should talk to... We need to insert a sound effect here. Speed Dial are marine chaos experts. They are, of course, Margo Brock and Anton Posner. They are the founders of Mercury Group, which specializes in dry cargo and global freight logistics, so really the perfect people to talk to about this moment. Let's just talk about what you're seeing right now. Now, with the Strait of Hormuz, you have a lot of clients who I assume have some presence there. Again, you guys specialize in dry bulk, dry cargo, but you have a good handle on what's going on. What are you seeing and witnessing and living through at the moment?

Anton Posner (3:46)

Sure. Yeah, it's always great for us to be on during marine chaos time. As I mentioned to Tracy yesterday, I think that's going to be new business cards from Margo and I am a great chaos expert. Certainly, they kick things off right in addition to everyone knows oil and gas are flowing through Strait of Hormuz and Persian Gulf, which is always the headline commodity sector that everyone talks about in the region. You also have things like outbound fertilizers coming out of the region. You have outbound aluminum being produced by Emirates Global Aluminum and Quattalum and Alba, Aluminum Bahrain. You have inbound raw materials for the aluminum production. Luminah that goes into aluminum production that needs to flow in. You have containerized goods, right? You have inbound grains going into the Persian Gulf. So there's a lot more than just oil and gas that's affected when there's a problem in the region. Right now, we're seeing in our world that's heavy on metals, of course, is being affected by the inability for Gulf aluminum producers to be able to ship aluminum out, they're moving out of the Gulf. So that's already created a spike in global aluminum markets. And there's a shift at the moment going on. I think Everett's Global Aluminum was the one that said, they're going to start fulfilling orders with aluminum stockpiles that they have in other parts of the world. So we're starting to see an effect on the markets that we're involved in. And of course, overall, diesel in the United States jumped significantly over the past couple of days. So we're going to see that trickle down effect coming into the world of our inland logistics in North America, barge freight on the river system, truck freight, rail freight, where we're going to start seeing, potentially start seeing fuel surcharge clauses kick into effect as diesel starts to move up.