economy
'I never heard of the Strait of Hormuz before this': How one medical supply CEO is navigating the oil price shock
Medical supply company Gentell sources raw materials from around the world, and the crisis at the Strait of Hormuz is causing volatility for its business.
TL;DR
- Gentell's CEO, David Navazio, was unaware of the Strait of Hormuz until recent global events impacted his business.
- Raw material costs for Gentell's products have increased by up to 30% due to oil and gas production derivatives.
- Shipping costs have more than doubled, with a container from New Zealand to California now costing $4,500, up from $2,000.
- The company is currently unable to pass all increased expenses to consumers, particularly its largest customer, the U.S. government via Medicare.
- Gentell is experiencing a "margin crunch" but anticipates a "trickle-down effect" on pricing if raw material price volatility continues.
- The company has faced previous challenges including tariff uncertainties and COVID-19 supply chain disruptions.
- Navazio stated that if the conflict does not end and the Strait of Hormuz remains stalled, Gentell "will raise the price."