Overview of Crisis at Hormuz, and your $160b tariff refund clock — with Flexport’s Ryan Petersen
This Rapid Response episode (host Bob Safian) interviews Flexport CEO Ryan Petersen about real‑time trade disruption from military action closing the Strait of Hormuz, the likely payout and practicalities around ~$160–$166 billion in tariff refunds after the Supreme Court ruling, and how AI is reshaping logistics. Petersen contrasts which parts of global trade are most exposed (air freight, energy, fertilizers) versus those less immediately affected (most container shipping), explains practical problems companies are already facing, and describes how Flexport is using AI and financial products to help customers navigate uncertainty.
Key takeaways
- The Strait of Hormuz closure primarily spikes oil and gas prices and threatens energy availability in many Asian and Pacific markets; secondary supply risks (fertilizer, helium, chemical feedstocks) may have deeper long‑term consequences.
- Air freight is hit hardest: Middle Eastern carriers account for ~15–20% of global cargo capacity and Dubai is a major hub; air rates have roughly doubled in some lanes and risen 50–60% on others.
- Container shipping impact is more about rerouting and disruption to Red Sea/Suez traffic than the Persian Gulf itself; some containers are being offloaded at unplanned ports, creating stranded‑cargo and storage‑fee nightmares.
- Flexport believes tariff refunds are very likely to be paid (court compelled refunds), but timing and paperwork are uncertain. A secondary market exists where hedge funds buy claims (often ~>70¢ on the dollar for large claims).
- Flexport is applying AI broadly (e.g., customs compliance audits) and reports dramatic error‑rate reductions — from 1.8% to 0.2% — after deploying an AI agent that audits 100% of entries.
- Supply chains will likely remain unstable; businesses should plan to operate under persistent uncertainty.
What’s happening now — impact breakdown
Energy & commodities
- Oil and diesel prices spiking; shortages already reported in places like Australia and the Philippines (the Philippines gets a very high share of oil via Hormuz).
- Fertilizer shipments are at risk during planting season — could create severe downstream food production problems.
- Helium supply is vulnerable (Qatar supplies ~30% of world helium), which affects semiconductor manufacturing and space launches.
Air freight
- Middle Eastern carriers (Emirates, Etihad, Qatar Airways) are central hubs; disruption/refueling/route changes plus higher fuel costs have caused sharp freight rate increases.
- High‑value, time‑sensitive shipments (fashion launches, electronics) are being priced out of air freight.
Ocean/container shipping
- Red Sea/Houthi attacks had already pushed container traffic around Africa; recent activity has driven more ships back around the Cape of Good Hope, lengthening voyages.
- Containers are sometimes being discharged at “next port of call” (not the intended destination), causing unplanned storage fees and logistical nightmares.
- Only a small fraction of container ships are stranded in Hormuz (one count: 57), but many voyages are rerouted/disrupted.
US exposure and regional effects
- The U.S. is somewhat insulated by domestic oil production, but consumers and certain regions (e.g., California with refinery closures) will still feel pain.
- Short-term policy moves (e.g., Trump’s temporary Jones Act suspension) can relieve supply issues for places like Hawaii and Puerto Rico.
Tariff refunds: what importers need to know
- Supreme Court ruling against the administration’s prior tariff authority has created an expectation of large refunds — figures cited around $160–$166 billion and ~330,000 affected companies.
- Only a small percentage (~6%) of companies had entered bank info with CBP (as reported), so many companies are not yet positioned to receive funds.
- Options for importers:
- File claims and wait (timing uncertain; paperwork and potential rejections are issues).
- Sell the refund claim to a hedge fund/secondary buyer (large claims may fetch >70¢ on the dollar).
- Flexport plans to launch financing products to buy smaller claims (below $10M), making liquidity accessible to firms that previously couldn’t participate in the secondary market.
- Practical help: Flexport provides a guide (tariff.flex4.com) to walk importers through steps.
AI and logistics — Flexport’s approach & results
- Flexport built an AI agent to audit customs entries and now audits 100% of filings before transmission to government agencies.
- Result: customs error rate dropped from ~1.8% to ~0.2%.
- Petersen argues AI is both an enormous opportunity and a replacement risk: firms that adopt AI effectively will outcompete those that don’t.
- Flexport prefers to internalize AI capabilities (apply to its own operations) rather than hand proprietary workflows and data to external foundational‑model vendors.
Notable quotes
- “Oil is not just about pumping your gas in your car… it is existential, I think, how all of the economy functions.”
- “We audit 100% of our customs entries… it reduced our error rate from 1.8% to 0.2%.”
- Assessing shipping disruptions: “COVID… was like an eight. The Red Sea disruption was a five or six. This is a two or three for container shipping — but one of the worst things imaginable for air freight.”
Practical actions & recommendations (for importers / supply chain managers)
- Check whether your company is owed a tariff refund; enter required CBP banking info promptly (many firms haven’t).
- If you need cash now, evaluate selling refund claims (weigh likely timeline vs discount you’ll accept).
- Reassess routing strategies: anticipate longer ocean voyages, higher air rates, and potential for misplaced containers — build contingency plans and inventory buffers for critical SKUs (fertilizer, semiconductors, high‑value launches).
- Use technology: apply AI tools for compliance, error reduction, and faster operational decision‑making.
- Prepare for prolonged uncertainty: run scenario planning, stress‑test supplier/geography concentration, consider alternative suppliers/ports/transport modes.
- Monitor policy changes (tariff investigations, Jones Act suspensions) and adjust procurement and logistics strategies accordingly.
Bottom line
Petersen is confident tariffs will be refunded and that AI is a structural game changer for logistics. He’s less certain about geopolitical stability and foresees sustained unpredictability in supply chains. For businesses: act now on refunds, reassess logistics plans with the expectation of ongoing disruptions, and accelerate practical AI adoption to reduce errors and improve resilience.