Since its launch in early 2024, Folk Maritime has navigated challenging market conditions in the Middle East, impacting its initial growth plans as a feeder and regional container line. The company began operations shortly after major container lines rerouted vessels around the Cape of Good Hope to avoid the Red Sea and the Houthi threat off Yemen. Further disruption arose when the Strait of Hormuz closed due to war in the Middle East, fundamentally affecting supply chains.
Poul Hestbaek, CEO of Folk Maritime, stated on the Seatrade Maritime News Podcast that the company was fortunate its ships were not in the Gulf when hostilities erupted. Operations have since adapted to maintain cargo flow. “Before February 28th, we had access to two services from India into the Gulf, reaching Iraq and Saudi Arabia. These services were terminated with the closure of the Strait of Hormuz, but our two vessels operating in that trade corridor were outside,” Hestbaek explained. “We began employing them from India, from Oman into the Red Sea to cater for predominantly local cargo from India that used to go via the Gulf into Dammam and further into the hinterland of Saudi.”
This cargo now moves through Jeddah into Saudi Arabia, and then into Bahrain, Qatar, and Kuwait, which have become effectively landlocked by the Strait of Hormuz closure. Hestbaek noted that the challenges from Middle East supply chain disruptions have evolved since the conflict began. “The most difficult part was that there was no lack of visibility. We did not know what would be the reality tomorrow,” he said, describing how global cargo initially became stranded as shipping lines adopted a ‘wait and see’ approach.
Once lines realized the conflict would not end quickly, ships rushed to discharge cargo at any Indian Ocean rim port, leaving it until consignees decided to move it, either by waiting for the Gulf to reopen or committing to the more expensive and slower route via Jeddah. These volumes of local and transshipment cargo have now stabilized. “Secondly, what happened was that the cost for bunkers just went through the roof. In bunkering, we usually bunker in Jeddah, and at times the prices were triple what was normal before the Strait of Hormuz closed down. So, on the cost side, it has been dramatic,” Hestbaek added.
Supply chains are now experiencing congestion, similar to the aftermath of the Bab al-Mandeb Strait closure. “We have waiting time for berthing in several of the ports in the Red Sea area, and that, of course, is adding more cost and bringing less efficiency into the calculation,” Hestbaek stated. The situation has also impacted Folk Maritime’s fleet strategy and slowed its network growth. “We had the ambitions to build up our fleet of our own container vessels slightly faster than what we’re seeing right now,” Hestbaek said, attributing this partly to a tight supply and demand market for both chartering and acquiring second-hand tonnage due to various global crises.
Despite these challenges, the company is maintaining stable growth. “This year we hope to grow plus 30-35% so we are very strong still, but we have not been able to expand our network as we would have liked. That is probably going to be pushed into 2027, but we have had a chance to optimize and become leaner and fitter, and we have been able to stay very agile in the situation that we’re in the middle of right now,” Hestbaek affirmed. He believes that while a potential reopening of the Red Sea would free up ship capacity, its impact would differ for mainline container lines versus regional carriers.
Hestbaek sees a growing focus on near-shoring and friend-shoring, where businesses source goods from reliable partners. He also believes regional customers require a different level of service, which larger lines, moving towards greater automation, might struggle to provide. “My belief is that the combination of this, more near-shoring, friend-shoring will actually cement our position and growth in the regional trades,” he concluded. “When it comes to the Middle East, I believe that we will play an increasing role. We will continue to be both a feeder operator and a regional container line, but I would predict that our regional container line share will quickly become the main part of our business.”
#FolkMaritime #MiddleEastShipping #SupplyChainDisruption #RedSeaCrisis #StraitOfHormuz #MaritimeLogistics #ContainerShipping #RegionalTrade #ShippingChallenges #GlobalTrade
