The blockade of the Strait of Hormuz, which has been ongoing for three months, has sent shockwaves through energy and some commodity markets, sparking fears of a surge in inflation and a rise in global logistics costs. So far, the impact on the pet food industry has remained limited, though businesses are following the situation with serious concerns.
Initial news about the blockade of the Strait of Hormuz fueled fears that the pet food industry in different parts of the world could face a raw material shortage or a hike in operational costs. So far, the worst forecasts have not materialized.
"The UK pet food industry is watching developments around the Strait of Hormuz very closely, particularly because of the potential knock-on effects on global shipping, energy markets and wider supply chains," Nicole Paley, deputy CEO of UK Pet Food, told Petfood Industry.
"At present, there is no indication of any immediate impact on the availability of pet food products in the UK," Paley added.
The impact across the pet food industry of the situation in the Strait of Hormuz has varied, depending largely on each company's individual supply chain structure, according to Franco Garbelotto, deputy secretary general with FEDIAF, a European pet food association.
"The most horizontal and immediate effect has been on energy costs — pet food manufacturing is energy intensive, and any upward pressure in that area feeds through across the board," Garbelotto added.
Rolling with the punches
Essentially, every major geopolitical crisis of the past few years brings risks for the pet food industry that need to be carefully assessed and managed, and the escalation of the conflict in the Middle East is only a new link in a chain of big events affecting the pet food industry in recent years, said Garbelotto.
"One of the big lessons from the last few years is that supply chains are now incredibly interconnected," Paley said. "Whether it was the pandemic, the war in Ukraine, or wider global freight disruption, our industry has become very used to navigating volatility and adapting quickly when international events create pressure elsewhere in the system."
Outside Europe, the impact of the conflict on the pet food industry is also not tangible.
For example, in Russia, the situation in the Strait of Hormuz has not had a substantial impact on the pet food business, Yulia Dozhenkova, business development director at Zooinform, a Moscow-based pet business media outlet, told Petfood Industry.
There are quite a few different processes affecting the Russian market that dwarf any potential impact from the Middle East crisis, Dozhenkova said.
At the same time, in Cyprus, she added, the impact is felt in the rise of the costs of gasoline and consumer goods.
In other parts of the world, the picture is rather similar. For example, members of the Pet Food Industry Association of Southern Africa (PFISA) have not provided any information about the potential impact of the Middle East crisis, though this doesn't mean that there was no impact at all, Dominique Kuhlmann, executive director of PFISA, told Petfood Industry.
Lessons to be learned
For the pet food sector, the main concern is the wider disruption that could follow from any prolonged instability.
"Increased shipping costs, longer transit times, rising fuel and energy prices, and pressure on global commodity markets can all feed through into manufacturing and logistics costs across the supply chain," Paley said. "Ingredients, additives, packaging materials and transport availability are all affected by broader global market dynamics."
According to Paley, pet food manufacturers have become significantly more resilient in recent years because they have had to be. She explained that businesses are now much more focused on contingency planning, supplier diversification and building flexibility into sourcing and logistics strategies.
"Companies are constantly reviewing alternative supply routes, monitoring cost pressures and working closely with supply chain partners to manage risk as effectively as possible," Paley noted.
That does not mean the sector is immune to prolonged global disruption, particularly in energy and freight markets, but the industry is far better prepared than it would have been several years ago.
"There is now a much greater understanding across the sector of how quickly global events can ripple through supply chains, and businesses have adapted accordingly," Paley added.
