Issue link: https://maltatoday.uberflip.com/i/1543797
maltatoday | SUNDAY • 8 MARCH 2026 Consumers could bear the brunt of Iran war Industry leaders tell MaltaToday that neither businesses nor consumers will be fully sheltered from the economic effects of the US-Israel war with Iran BUSINESSES are already feel- ing the pinch from the US-Is- rael war with Iran. Shipments are being rerouted, insurance premiums have gone up, and freight costs are on the rise due to oil price increases. All this will likely trickle down to the consumer in the form of higher prices. Several business leaders, who spoke to MaltaToday describe how their operations have already been affected by the war, with the main concerns stemming from high freight costs driven by fuel price in- creases and longer voyages. Frederick Schembri, general manager at Torrent Pharma, a pharmaceutical company, said his firm was affected af- ter flights that traditionally commuted through Dubai had to be rerouted, although con- nections with other airports helped resolve this. However, shipping routes are already being redirected through the Cape of Good Hope in South Africa, impacting the compa- ny's supply chain. "When the ship travels the South Africa route it adds 3-4 weeks to your route. We're having to stock up more in- ventory in Europe in order to mitigate the impact that the shipping route is going to take by not passing through the Middle East," Schembri said. David Fleri Soler, chief com- mercial officer at Express Trailers, a transport and logis- tics firm, said that even if the government helps cushion en- ergy price shocks locally, price changes in Europe will have a direct effect on the logistics scene. "We buy our diesel for ferries in Europe," he said. "Diesel prices increased by 24% in just two days in mainland Europe. This is going to have a direct effect on us. Ferry costs will most probably increase too because of the Bunker Adjust- ment Factor (BAF)." The BAF is an additional charge applied by shipping lines to account for changes to fuel prices. It's affected by fuel prices most directly, but also by transportation routes. Kevin Mizzi, head of poli- cy at the Malta Chamber of Commerce, said global crude oil price increases will force carriers to increase the BAF, along with significant sur- charges on Mediterranean and transhipment routes. "Emissions Trading System costs for container shipping will rise due to longer routes around Cape of Good Hope. As a result, shipping line costs are going up, sometimes reaching as much as three times their original price," Mizzi said. Norman Aquilina, CEO at Farsons, a beverage company, said the company has not seen any price increases yet, but there are growing signs that this will happen unless the sit- uation deescalates soon. "If this situation persists, it will certainly contribute to- wards uncertainty with all its implications. Businesses may be compelled to opt for just- in-case inventory levels as op- posed to just-in-time. In other words, higher stock holding to ensure business continuity," he said. Costs will trickle down to consumers As fuel prices and shipment surcharges go up, businesses will most likely end up passing the cost onto consumers. "I think there will be adjust- ments," Fleri Soler said. "Busi- nesses can't afford to absorb a 24% increase in fuel overnight. How that will trickle down to consumers depends on what will happen in the next days; if the war continues, if the Strait of Hormuz closes." Schembri shared this sen- timent but also warned that some companies might take advantage of the conflict and increase prices despite not be- ing affected by the war. "We've seen it during COV- ID-19. Prices never fell to pre-COVID levels but re- mained at all-time highs. Then the war in Ukraine broke out, which was another excuse for increases in certain heavy metals and commodities. Now, it's a war in the Middle East that impacts trade routes from Asia into Europe. At the end, there will be justified price increases, but also 'ghost inflation' from companies us- ing the war as an excuse to in- crease prices." NICOLE MEILAK nmeilak@mediatoday.com.mt IRAN WAR