Q&A: Supply chain under siege: Rohit Tripathi on what the Hormuz crisis actually means for manufacturers
May 5, 2026 • 7 min
When the Strait of Hormuz closed to Western-allied shipping in early March 2026, most of the coverage focused on oil. But Rohit Tripathi, VP of Industry Strategy at RELEX Solutions, has spent the weeks since focused on a different question: what is the specific and direct impact on the manufacturers who depend on everything else that moves through that channel? We asked him to explain.
Q: You’ve been doing press on this since early March. What are people getting wrong about what this crisis actually entails?
A: (Rohit) Everyone is treating it as an oil story. It is not only an oil story. The same closure that blocks crude also blocks 84% of Middle East polyethylene exports, which is the raw material that goes into plastic packaging, consumer goods, and toys. It blocks 30 to 50% of global nitrogen fertilizer exports. It also blocks a quarter of the world’s liquefied natural gas (LNG) trade. Energy, fertilizers, and industrial chemicals are all disrupted at once by the same 21-mile channel.
What that means for manufacturers is that your input costs are not rising for one reason. They are rising for several reasons simultaneously, and those reasons compound each other.
Some companies are asking, “How do I absorb the surcharges?” or “How do I reroute?” But treating this as a freight cost problem is only solving for the smallest part of the problem.
There is also the air cargo dimension that has gotten almost no coverage. Gulf carrier capacity on the South Asia-to-Europe corridor is down more than 60%. For manufacturers in Bangladesh, India, and Sri Lanka, that means finished goods are sitting at airports.
Think of it this way: spring and summer collections exist. They are sewn, tagged, boxed. But they are simply not moving.
Q: Many manufacturers built their disruption playbooks around the 2023-2024 Houthi attacks on Red Sea shipping. You argue that that experience is working against them right now. Why?
A: (Rohit) The Red Sea crisis, which started with Houthi attacks on commercial shipping in late 2023, trained a very specific response into the industry: solve for delay. Add lead time. Build buffer stock. Reroute around the Cape of Good Hope, absorb the premium, and wait it out.
That worked because the Red Sea has an alternative route. Ships could go the long way. Goods moved slowly and at a steep cost, but they moved.
But the Strait of Hormuz has no alternative. It is a dead end. If it closes, everything inside the Persian Gulf stays there. You cannot reroute your way out of this one.
The other problem is that both corridors are now disrupted simultaneously. When the Iran conflict started in early 2026, Houthi attacks on Red Sea shipping resumed. So companies that built their response around rerouting through the Red Sea corridor now find that route disrupted too. The playbook from 2023 and 2024 is incomplete in this situation, and it’s pointing in the wrong direction in certain cases.
What makes Hormuz fundamentally different is that for certain inputs like resins, fertilizers, and naphtha, this is actually a supply availability problem, not a delay problem. Buffering against a delay and buffering against a shortage require completely different responses. And companies that default to the 2023 playbook are building the wrong kind of buffer at exactly the wrong moment.
Q: Why does the “buy more, buy now” response to the Hormuz crisis make things worse when the problem is a shortage rather than a delay? How should manufacturers respond?
A: (Rohit) When you buffer against a delay, you pull orders forward. You buy more lead time, you pre-position inventory, you accept higher carrying costs in exchange for continuity. The Red Sea situation taught people to follow that contingency plan and it worked. Goods were slow, yes, but they arrived. So companies built that muscle.
When you buffer against a shortage, pulling orders forward can make things worse. You are competing for a constrained supply pool. Everyone pulling forward at once drives spot prices higher, accelerates the price spike you are trying to hedge against, and leaves you holding elevated-cost inventory when the market eventually corrects. The companies that defaulted to the “buy more, buy now” strategy on Hormuz may have locked in the worst of the price peak.
The right response to a shortage is the opposite of the right response to a delay. You segment ruthlessly, you secure allocation on the inputs you cannot substitute, and you adjust what you make rather than stockpiling what you were already planning to make to protect margins.
Q: Can you walk through what the cost impact actually looks like for a manufacturer right now? Not in the abstract, but in terms of decisions they’re making this week.
A: (Rohit) Different types of manufacturers may be impacted in unique ways.
Take a toymaker. April through June is when they place their largest production orders for holiday inventory. They are locking in resin contracts right now.
But polyethylene and polypropylene prices are up significantly since the closure began on February 28. Every purchase order they sign this week bakes current crisis pricing into the cost of goods sold (COGS) for products that will not reach shelves until October. And analyst forecasts suggest elevated pricing will last for at least another six months because the new U.S. polyethylene capacity that would provide relief won’t come online until late 2026 at the earliest.
That is the timing trap. The holiday production window and the peak of the supply shock overlap perfectly.
For apparel and fast fashion, the immediate problem is different. The goods exist. But the air freight corridor that moves them from South Asia to Europe is broken. Freight rates from Mumbai to Europe have roughly doubled. Goods that were supposed to arrive in March and April are sitting at origin airports. When they finally move, they will land weeks late into a selling window that has already started. That means markdowns, not stockouts, because the inventory shows up after its commercial moment has passed.
The cotton-polyester dynamic is also shifting in ways that create both a problem and an opportunity. Cotton comes from farms, and polyester from oil wells. Historically, that’s meant cotton costs more to produce than polyester.
With the current crisis, polyester feedstock costs have surged while cotton prices have barely moved. For the first time in years, cotton is approaching cost parity with polyester. So sourcing teams that can pivot fiber mix in the next two to four weeks can protect their margins. But teams running quarterly planning cycles will absorb the full impact before they even see it coming.
Q: What does the gap look like between manufacturers handling this well and those that aren’t? What are you seeing in the industry?
A: (Rohit) The first thing I’m seeing is that the companies handling this well are reforecasting their landed costs weekly. The cost assumption in their last planning cycle is already wrong, and it gets worse every week they do not update it.
The companies that know and act on that fact are adjusting production volumes, order quantities, and product mix before the damage is done. The ones running static plans are going to discover the margin hit in August when they can no longer do anything about it.
The second thing involves aggressive segmentation. The companies doing this well have made a clear-eyed decision about their SKU portfolio. For their top 20% of products by revenue, they are building a buffer now, even at elevated cost. Those are the items where a stockout destroys more value than the carrying cost. On the long tail, they are pulling back, delaying orders, and accepting that some slower-moving items will not make the seasonal window.
The companies that are struggling are the ones trying to treat every SKU the same way. They are either over-ordering across the board because they are scared of stockouts, or under-ordering across the board because they are scared of cost. Both of those approaches are wrong.
The answer is differentiation, and differentiation requires visibility into what you actually have, where it actually is, and what it is costing you to move right now.
By the way, the early warning signal is your sell-through data at the register, not a shipping notification. When what is selling diverges from what is arriving, you have days to act, not weeks.
Q: When this is over, however it ends, does the industry go back to the same design choices, or does something change permanently?
A: (Rohit) I think three things change, and they were already changing before this crisis. The crisis has just compressed the timeline.
The first is real-time inventory visibility. Before this, it was a competitive advantage. After this, it will be a baseline requirement. The companies that could not see where their inventory was across their full pipeline — and I don’t mean just in their own warehouses — paid for that blindness in 2026. That lesson will not go away.
The second is single-chokepoint concentration. Half of the world’s polyester feedstock flows through one 21-mile-wide channel. That is a supply chain design flaw. The industry accepted it because the economics were good and the risk felt theoretical. The risk is no longer theoretical. I have to imagine that nearshoring and genuine supplier diversification will accelerate as a result.
The third is demand sensing: the ability to take point-of-sale (POS) data and adjust your supply plan in days rather than weeks. The RELEX State of Supply Chain 2026 report, conducted in January before this crisis began, found that 47% of supply chain leaders were already deploying AI for inventory and supply optimization.
I would bet that number will be higher next year. The companies that come through this best are not the ones with the most inventory. They are the ones with the best visibility into where their inventory actually is right now.
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