War rewrites the corporate playbook: companies pay more to protect supply chains

War is rewriting the rules of corporate management. As more companies prioritize supply chain resilience over cost efficiency, analysts warn that manufacturing and logistics expenses are set to rise structurally — and that the added burden, from food to electronics, could become a new driver of consumer price inflation.

Global companies have been fundamentally overhauling their supply chain operations in the wake of the Iran war, The New York Times reported Wednesday. Firms are moving away from strategies that relied on the most cost-efficient production bases, instead spreading facilities across multiple countries, building up inventories and securing alternative shipping routes.

"Every business leader is saying they need to have options," said Kevin O'Marah, chief research officer at supply chain research firm Zero100. "Flexibility means extra capacity, inventory and alternative transport routes — but that costs money. It ultimately leads to inflation."

The International Monetary Fund has also projected that global inflation will reach 4.7 percent this year, driven by rising energy, metals, fertilizer and food prices — up from 4.1 percent last year.

The costs companies face are already materializing.

Maersk, one of the world's largest shipping companies, has been rerouting some cargo by rail and truck instead of by sea as tensions in the Strait of Hormuz intensify. Goods are offloaded at the Saudi port of Jeddah and transported overland through Jordan and Iraq to Kuwait, Qatar and Bahrain.

"It's not the most efficient method under normal circumstances, but it becomes the most efficient when the strait is closed," Maersk CEO Vincent Clerc said, adding that the detour adds about $1,000 in extra costs per container.

He said those costs would ultimately translate into higher consumer prices or weaker corporate profitability.

Logistics costs are also staying elevated.

Global logistics firm Rhenus said freight rates have eased somewhat recently but remain 84 percent higher than a year ago. Delivery delays, rising energy prices and higher insurance premiums tied to war risk are also adding to the burden on businesses.

Corporate investment criteria are shifting as well. A survey by global supply chain consultancy Proxima of more than 500 CEOs at companies with annual sales of $500 million or more found that about three-quarters of respondents were willing to absorb cost increases of 10 percent or more to secure supply chain resilience.

The finding signals that avoiding supply disruptions has become more important than cutting costs. Spreading factories across multiple countries — even at some loss of productivity — and maintaining larger-than-usual inventories are emerging as the new management standard.

Energy transport networks are also being rapidly reconfigured. Oman is pursuing port expansion outside the Strait of Hormuz, while Iraq is reviewing plans to build new oil pipelines. Saudi Arabia and Turkey are in discussions about constructing a rail network linking Jordan and Syria. Investment in alternative infrastructure to reduce dependence on the Strait of Hormuz is gaining momentum.

"This is no longer an era of cutting costs by choosing the most efficient option," said David Goldwyn, a former official at the US Department of State and Department of Energy. "It has become an era of investing in security, resilience and redundancy."

Companies have begun treating geopolitical risk not as a temporary variable but as a permanent feature of the business environment. Even after the war ends, the costs of dual-sourcing supply chains, expanding inventories and building alternative transport networks are likely to persist — and could translate into sustained structural upward pressure on prices across the global economy.