Hormuz Surcharge: What It Means for Shipping Costs

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Geopolitical Risk

Nothing about your business changed this month. You didn’t switch suppliers, renegotiate a contract, or open a new sales channel. And yet, starting in August, your next shipping invoice might be higher anyway.

Why This Is Happening

Here’s why: several major ocean carriers are introducing new Emergency Fuel Surcharges this month, and the reason has nothing to do with your business and everything to do with a standoff thousands of miles away. The United States and Iran have been in conflict since late February. In June, the two sides actually signed a preliminary agreement, including Iran reopening the Strait of Hormuz and the US lifting its naval blockade, but that arrangement broke down, and by late July the blockade was back and strikes had resumed (S&P Global Market Intelligence, 2026). The Strait of Hormuz is a narrow shipping corridor that a significant share of the world’s oil and container traffic passes through, so when it gets risky again, insurers raise premiums, ships take longer, safer routes, and fuel costs climb. Carriers don’t absorb that. They pass it straight to the shipper, as a line item nobody asked for and nobody can negotiate away (Kanetora, 2026).

There’s something almost absurd about it, if you sit with it for a second. A disagreement between two governments, playing out in a stretch of water most people couldn’t point to on a map, ends up as a few extra dollars on an invoice for a hardware store, a boutique importer, or a landscaping company that buys equipment from overseas. Nobody in that chain voted for this. Nobody negotiated it. It just arrives.

The Bigger Pattern

That’s really the pattern worth sitting with here, more than any single surcharge: how much of what a small business absorbs financially now originates somewhere it has zero visibility into and zero say over. Tariffs work this way. Shipping insurance premiums work this way. Currency swings work this way. A small business owner ends up, in effect, managing exposure to decisions made in rooms they’ll never be in, using information they’ll rarely have in advance.

Why This Isn’t Going Away

The data suggests this isn’t a passing season, either. Nearly half of the businesses that have already paid tariffs over the past year say they still have more price increases coming, not because anything new happened, but because the earlier increases are still working their way through supply chains (Abel et al., 2026). Whatever gets resolved or doesn’t in the Strait of Hormuz, the broader pattern, cost surprises originating in geopolitics rather than in the business itself, looks like it’s becoming a permanent fixture rather than an occasional storm to wait out.

Who Actually Absorbs This

It’s also worth being honest about who absorbs this unevenly. Nearly all small and mid-sized businesses surveyed this year said tariffs and shipping disruption had already hit their sourcing or shipping directly, and roughly a third are bracing for the impact to be significant or worse (Ship4wd, 2026). Larger companies have legal teams, hedging strategies, and alternate suppliers already lined up. A five-person company doesn’t have that same cushion, which means the same surcharge that’s a rounding error for one business can be a real, felt cost for another.

The Bottom Line

None of this has a clean resolution. There’s no negotiating with the Strait of Hormuz. But there does seem to be a real difference between businesses that treat this as background noise until it hits them, and ones that at least ask the question in advance: what happens to us if shipping costs move again next month, and what would we actually do about it? That’s a small shift in posture, but it may end up being the difference between being surprised by the next line item and simply expecting it.

Please note: The observations and insights in this post are general in nature. The Muninn Group shares general analysis and observations in this Insights section. Specific strategic recommendations for your business require a direct engagement where your particular situation, market, competitive position, and financial reality can be assessed properly. Your first consultation is always free. The Muninn Group will not hand you a deck full of buzzwords.

Works Cited

Abel, J. R., Amiti, M., Deitz, R., Heise, S., & Montalbano, N. (2026, July 8). More tariff pass-through is in the pipeline. Liberty Street Economics, Federal Reserve Bank of New York. https://doi.org/10.59576/lse.20260708

Kanetora. (2026, July 28). Global trade news roundup as of July 28, 2026: Key impacts on international business, logistics, plastics and packaging. https://kanetora.vn/global-trade-update-july-2026-logistics-plastics-packaging/

Ship4wd. (2026, May 20). 2026 small business supply chain report. As reported in Supply & Demand Chain Executive. https://www.sdcexec.com/safety-security/risk-compliance/news/22966556/ship4wd-tariffs-the-defining-supply-chain-challenge-for-us-businesses-ship4wd-survey

S&P Global Market Intelligence. (2026, July 20). Geopolitical risk brief: July 2026. https://www.spglobal.com/market-intelligence/en/news-insights/research/2026/07/geopolitical-risk-brief-july-2026

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Philip White is the Founder and Principal Consultant of The Muninn Group, North Carolina’s premier strategic consulting firm. He is an Economist, Political Strategist, Geopolitical Risk Analyst, and accomplished Public Speaker based in Wilmington, NC. Contact: havi@themuninngroup.com | 910-632-0431 | themuninngroup.com

Geopolitical Risk

A confrontation between the United States and Iran, centered in part on control of and access to the Strait of Hormuz, illustrates a broader pattern relevant to small and medium-sized enterprises (SMEs): geopolitical risk originating far outside a firm’s direct operations can transmit into its cost structure through global logistics networks, often with limited advance notice and no direct recourse for the affected firm.

I. The Transmission Mechanism

The transmission mechanism is straightforward, though the underlying conflict has not been a static standoff. The United States and Iran have been in conflict since late February 2026. In June, the two parties signed a Memorandum of Understanding opening a 60-day negotiation window, including provisions for Iran to reopen the Strait of Hormuz and for the United States to lift its naval blockade; that arrangement subsequently broke down, and by late July the blockade had been reimposed alongside renewed strikes (S&P Global Market Intelligence, 2026; EY-Parthenon Geostrategic Business Group, 2026). The Strait itself is a narrow maritime corridor carrying a substantial share of global oil and container traffic, and each renewed escalation elevates risk to shipping and energy flows even absent open, sustained warfare. Heightened risk in a chokepoint of this kind raises war-risk insurance premiums, lengthens or redirects vessel routing, and increases fuel costs. Carriers do not absorb these costs internally; several are introducing Emergency Fuel Surcharges beginning August 2026 specifically citing the US-Iran conflict and Strait of Hormuz risk (Kanetora, 2026). Critically, a carrier may reduce its base freight rate while simultaneously raising fuel, war-risk, or operational surcharges, such that the final landed transportation cost to the shipper remains unchanged or rises even as the headline rate appears to fall.

II. The Theoretical Framework

This pattern is well explained by Real Options Theory. A firm facing widened uncertainty in future shipping costs benefits from preserving optionality, dual sourcing arrangements, shorter contract terms, flexible carrier agreements, rather than committing to long, fixed-price arrangements. The option to reroute, resource, or renegotiate carries genuine economic value precisely because the probability distribution of future costs has widened, not narrowed. A firm that locks in a long quotation-validity period during this period is effectively giving away that option for free.

Transaction Cost Economics offers a complementary lens. Shortening quotation-validity periods and incorporating price-adjustment clauses tied to freight or raw-material indices reduces the transaction costs of renegotiation under uncertainty, aligning contract structure with a now higher-variance environment. This is consistent with prior findings that trade policy uncertainty, distinct from tariffs themselves, imposes planning costs that can exceed the direct cost of the tariffs (LeMay & McMahon, 2026).

III. The Empirical Case for Disproportionate Exposure

The empirical case for disproportionate SME exposure is substantial. Among firms that have directly paid tariffs over the past twelve months, 47 percent of service firms and 44 percent of manufacturers report additional tariff-induced price increases still in the pipeline, with roughly 30 percent of tariff-paying service firms and nearly 40 percent of tariff-paying manufacturers planning further increases within six months (Abel et al., 2026). Separately, a 2026 industry survey found that 96 percent of small and mid-sized businesses reported a direct negative impact on shipping, sourcing, or supply chain operations over the prior year, with 31 percent bracing for significant to devastating impact in 2026 (Ship4wd, 2026). Federal Reserve researchers attribute part of this disparity to scale: larger firms can mitigate the incidence of higher input prices through legal structuring and possess greater latitude to maintain price markups, options generally unavailable to smaller firms operating on thinner margins (Abel et al., 2026).

IV. Structural Mitigation

Supply Chain Resilience Theory points toward structural responses, most notably nearshoring, as one available mitigation. Nearshoring has continued to reshape U.S. supply chains through 2026 even as tariffs and geopolitical risk complicate the shift, with trade volume continuing to move from ocean to overland routes (Transport Topics, 2026). This shift is not costless: it strains border infrastructure and introduces new compliance burdens, meaning resilience gained through geographic diversification must be weighed against the frictions it introduces, rather than treated as a costless substitute for the exposure it reduces.

V. The Bottom Line

Taken together, these frameworks suggest that the appropriate firm-level response to this class of risk is not to forecast the underlying geopolitical event, an exercise with limited reliability, but to restructure contractual and operational arrangements so that a wide range of outcomes can be absorbed without requiring a correct prediction. Shortened quotation periods, indexed price-adjustment clauses, verified secondary sourcing, and modest pricing buffers each convert an unpriced, open-ended exposure into a bounded, managed cost.

What the Hormuz episode ultimately illustrates is less about any single chokepoint and more about a structural feature of the current environment: the geographic distance between a risk’s origin and the firm bearing its cost has, if anything, been shrinking. A standoff in the Persian Gulf, a tariff schedule negotiated in Washington, a fuel index tied to a war thousands of miles away, each now reaches a small firm’s cost structure on a timeline measured in weeks rather than years. Firms that treat this as a recurring structural condition, rather than a sequence of unrelated shocks, are simply working with a more accurate model of the environment they now operate in.

Works Cited

EY-Parthenon Geostrategic Business Group. (2026, July). Geostrategic analysis: July 2026 edition. Ernst & Young. https://www.ey.com/en_gl/insights/geostrategy/geostrategic-analysis

LeMay, S., & McMahon, D. (2026). The impact of tariffs and trade policy uncertainty on SME supply chains. Journal of Small Business Strategy, 36(2), 73–86. https://doi.org/10.53703/001c.157795

S&P Global Market Intelligence. (2026, July 20). Geopolitical risk brief: July 2026. https://www.spglobal.com/market-intelligence/en/news-insights/research/2026/07/geopolitical-risk-brief-july-2026

Transport Topics. (2026). Nearshoring withstands tariffs, geopolitical upheaval. https://www.ttnews.com/articles/nearshoring-tariffs-geopolitics

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