Iran Conflict and the Freight-Market Fallout

Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepgett in London with the hosts of the Bluebeg Daybreak Europe podcast. We're up early every week day keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bluebeg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube or wherever you get your podcasts. Hi everyone. This is Lee Klaska. When we're talking transports, welcome to Bluebeg Intelligence, talking transports, podcasts. I'm your host Lee Klaska. Senior Freight Transportation Logistics Analysts at Bluebeg Intelligence. Bluebeg's in house research arm of almost 500 analysts and strategists around the world. Today's episode we're bringing together some of those analysts to discuss the implications of the US, Iran, war, which could have on the region, energy markets and the freight economy. One of Bluebeg Intelligence research platforms of benefits is our deep bench and global reach. Today, you'll be hearing from analysts based in Singapore, Dubai, Washington, D.C., and me in New Jersey. With me today is Kenneth Lowe. Bluebeg Intelligence Asia Pacific Shipping and Logistics Analysts. Sally Yilma. BI's Senior Energy Equity Research Analysts and Wayne Sanders. BI's Defense Analysts. Welcome to the podcast. Ken, Wayne and Sally. Thanks for having us. Yeah. So I'm glad you guys could all be here and really appreciate your time and insights. I'm going to start with you, Wayne, because you are our defense analyst and you will actually come from the military. So thank you for your service for that. So could you just give us some background about how we got here and how do you see this playing out in Iran? Yeah, absolutely. So President Trump obviously had multiple attempts over the last few weeks to try and bring Iran back to the table, specifically to address nuclear proliferation as well as the US wanting to make sure that we were also talking about Iran's missile stockpiles. He had provided multiple warnings. He had started to then do a buildup of military capacity and capability within the region to include sending over several aircraft carriers, nine destroyers, additional editorial combat chips and others, along with stationing about 120 plus US aircraft into the region. And then over the weekend when the timeline had had expired and started with his strikes at that point in time, really focusing on the F-22 suppression enemy air defense capabilities. The F-35, there were over 200 Israeli aircraft as well. And over the weekend we've seen over a thousand military targets be struck. Specific focus on that really was on leadership, air defense, launchers, missiles and military command and control. And what we've seen killed so far from a leadership perspective, obviously a Supreme Leader Ayatollah Committee, the IRGC commander as well as a chief of the armed forces and over 48 additional senior Iranian officials were killed as well during these strikes as well as a focus on the IRGC, which is the Iranian Revolutionary Guard Corps's naval capacity, trying to do what they can to be able to avoid any interdiction in disruption in the Straits of Form Mousse. So that's kind of where we've gotten to now I think really a lot of the questions that are coming back, obviously back in the United States is dealing with a lot of the policies tied to war powers acts. You'll see that locally overseas though you still have a potential to see surgeons in proxies as plausible the night ability, Hezbollah and militia attacks and things of that nature, continued focus to interdict shipping lanes inside of the Straits of Form Mousse. So I think watching for the IRGC's naval posture there as well as potential for additional cyber and drone attacks. Iranians' responses for them somewhat has been limited, but they still obviously have gone after not only US bases but also gone after airports. gone after civilian infrastructure for a lot of the Gulf states and allies in the region. So at that point in time I think it's more of a distributed response and retaliation from Iran, but they are limited in their capability right now based off of their missile numbers as well as their launchers. And I know everyone's crystal ball is extremely cloudy, but do you have any thoughts on how long this could last? Yeah, I think one of the biggest pieces here I think is going to be the sustainability of strikes from Israel and the US. If they continue to go after and hit these military targets, if they continue to go after the launchers, the launchers is one of the main things that Iran has to be able to show yes, we can still defend ourselves and we can actually push offence back onto you. The problem is that US Central Command sent comm, they put the numbers right now at about 1500 or less missiles remaining and they only have about 100 and 150 launchers. Why is that important if you go back and look at the 12 day Iran Israel conflict? The problem that you have there is you would see volleys of over 300, 350 at a time against one specific target. When you only have 100 launchers left, then you have to be very, very surgical about what you do or you spread it out and you're really hoping that the news media will carry the fact that oh, they're doing X, Y and Z. But in terms of their impact, in terms of where they've actually been able to strike and that weren't interdicted by some type of air defense from an ally, you're not seeing it as heavy as I was expecting originally. You mentioned the Iranians naval capabilities. Can you talk about what they've been doing, whether it's in the Red Sea or the Persian Gulf? Yeah, mainly if you look inside the Persian Gulf, you're looking at a lot of fast-craft naval vessels, excuse me, and there's really trying to focus on interdiction right there trying to do what they can. I think it's one of the reasons you've seen a lot of tankers actually go to anchor right now to avoid some of those areas. Obviously, Red Sea, you got to play in some of the Houthi land, if you will, but we haven't seen as much from them in terms of a counter-attacks strike or any type of proxy message is coming from them up until now. The P-Land sounds like a horrible place in the Disney World. So I'm going to transition a little bit to the Sali here or Energy Analysts or Senior Energy Analysts at BI. We're talking about the Red Sea. Can you talk Sali about how this has impacted the oil markets? Absolutely. To be honest, just until the open earlier today on Monday, it really wasn't very clear how the market would open, given the uncertainty with the conflict. I just want to start with how, just in the last couple of weeks, we already saw Brent and WTI prices inch higher, given this build-up of US military in the region and kind of in this anticipation of a potential strike and escalation of the conflict. We were already around $72 a barrel for Brent, which was about $10 a barrel higher than our fair value that we use our own proprietary model for. Since the attack over the weekend, the Brent price opened closer to $80 a barrel, which was actually our initial reaction, which is what we were expecting, but we really were unsure because things were moving so fast. So as things stand, we would estimate we have probably $15 to $20 a barrel of geopolitical risk premium on prices. Once again, I would call this mainly risk premium, more premium on prices because even though there's a lot of uncertainty, there's risk of further escalation, we haven't really seen any direct major supply disruption. And I think that's perhaps the most important thing to watch from here onwards because what happens next to oil prices is in this kind of retaliation cycle, whether one energy infrastructure is targeted and two, perhaps more importantly, the state of Hormuz, which is responsible for about 20% of global oil supply going through this passage every day. So these are the two main things that we would be watching, but I would say currently Brent sitting around $78 to $8 a barrel is mostly kind of the market trying to price the increased probability of actual physical disruption. But that being said, things are moving very fast just today, a couple of hours ago, we saw, I mean, we still weren't sure what it was, but it seems like it was part of debris from interception of a missile falling on the rust tanura refinery in Saudi Arabia, which is an, of course, an important energy infrastructure. It is a refinery, so it is not kind of oil production facilities, so that would be more relevant for products rather than crude oil. But nonetheless, I think that could be at first indication that, you know, by either side, perhaps energy infrastructure and targeting energy infrastructure could be on the table, which would take us from this kind of pricing of geopolitical risk premium, kind of the psychological what if type of scenarios to actually seeing actual disruption, which I think would structurally push prices higher. And then as briefly mentioned, a state of Hormuz, very important for oil, also very important for LNG, but I'll focus on oil for now. So, I mean, Iran has actually threatened to shut down state of Hormuz previously, but historically it never has. I think both logistically and practically this would be a difficult thing to do. But then I think what's important to note there is that it doesn't need to be an official closure, if you will, by Iran. What we're seeing right now is already as slowing down on the traffic just because of the heightened risk for some of these vessels. And also the increased cost of things like insurance. And in some cases, insurance companies straight out saying that they would not be ensuring some of these vessels, which would indirectly kind of slow down the traffic in the state of Hormuz, which again would be very consequential for oil and gas prices. Yeah, so just for those listening that aren't really aware of the region, you know, Saudi Arabia exports a lot of oil through the Persian Gulf and through the straight of Hormuz. Also there are some major oil exporters that are in the region, including Iran, Kuwait, Iraq, UAE. So it is a huge area where oil leads through tankers. And Sally, so the Saudis have alternatives to ship oil out of its country, export oil out of its country. Does it have other alternatives besides going through the Persian Gulf and through the straight of Hormuz? They do. And it's Saudi Arabia and the UAE that have alternative pipelines. Saudi Arabia has a bigger one that's the east to west pipeline. So they could use that to kind of redirect some of the crude from the Persian Gulf to the Red Sea and then lift it from there. But then this would not cover all of their exports, but it would help. And in the case of UAE, they also have a pipeline from Abu Dhabi, near Abu Dhabi to Pujera, which is on the Indian side, Indian ocean side of the country. So they could do this and it would help, but for other countries like Qatar trying to move its LNG, they don't really have an alternative. They rock trying to move its crude. It doesn't really, from the southern part of the country, it doesn't really have an alternative. But it kind of really just shows the importance, as you said, of the straight of Hormuz for these countries. And so just from your vantage point, obviously, you mentioned that the risk premium right now is a war risk premium. The longer this goes, it could become a supply premium. And do you think supply will really start getting impacted? Are we talking like, is this a couple more days, weeks, months, you know, until, you know, if oil can't leave that region, how is it going to impact the supply? And obviously, that's going to have a huge impact on pricing. I would gather for oil. Yeah, I mean, it really just depends, I think, on what happens next in the conflict. I mean, like I said, if some of the production facilities start getting impacted, then we would pretty quickly get a significant impact on oil production and hence oil exports. I mean, perhaps one precedent to look at is the, the attacks, drawn attacks on the upcake, oil processing facilities in Saudi Arabia back in 2019. And this actually took about 5 million barrels per day offline for about a week. And it was very significant. And this would, I mean, it only took days for this, of course, given the scale for that to be kind of impacted and kind of reflected in the balances. In the case of transit, again, probably a full closure is unlikely. It would probably be just a smaller disruption within the passage, which perhaps would become more apparent in weeks perhaps rather than days. But yeah, I would say those are the two main things to watch. What happens with the state of foremost and what happens with the energy infrastructure, especially the oil and gas production facilities? And since the oil and gas exports will be limited from that region until this, you know, comes to a conclusion, we don't know how long that is. Are there other exporters that can, you know, increase supply to help mitigate the impact of price? I mean, that's a very interesting point. And generally, the spare capacity that we talk about in the global oil markets is within uphack, the uphack group, which is dominated by the Gulf producers. So I mean, in the case of the current situation, uphack does have some spare capacity, but it's concentrated in Saudi Arabia and the UAE, to be honest, mostly Saudi Arabia. So, you know, they have the spare capacity, but once again, they are based in the Gulf and they are constrained to a big extent with the state of foremost. So other than that, I mean, if prices are high enough, you know, I think US shale has proven to be rather flexible and kind of fast responding, but how fast could it really respond? I mean, if oil prices go high enough, of course, I think it would be quite rapid to get a response from there, but it would not be as fast as what opaque could normally do with the spare capacity, which is literally capacity that they artificially keep offline that they can just bring back when and if they wanted to. You know, earlier this weekend or during the weekend, you know, we are all busy having fun writing research on this. You know, you mentioned that you expected the $80 Brent, as you mentioned, were there. Do you think we can get significantly higher and kind of, if there's like one thing that would really drive it higher, would it be the US or our radians taking out oil infrastructures? Is that the number one thing? Yeah, I mean, we have a kind of scenario tree that we worked on with Bloomberg economics. And the two scenarios where we get above $100 a barrel is kind of the escalation scenarios where in one, again, I mean, already mentioned, but straight up, foremost, is significantly disrupted. And this can be very meaningful because like I said, 20 million barrels per day, about 20% of global supply goes through there. It's very unlikely that it's fully shut. So all of that is unavailable to the world. And of course, there is that kind of pipe, there's those pipelines, but very significant. It's online. And the second one is, you know, either side but more likely Iran attacking other production facilities in the Gulf or in Iraq. And this is the other scenario we keep where we that can take us to triple digit oil prices. And these aren't mutually exclusive. So I mean, we look at these scenarios separately. And in either one, it could get to a point where prices are pushed above $100 a barrel. But these two things could happen at the same time that really could take oil to unprecedented levels. Again, we've argued that this is a tail risk for a long time, but given developments over the weekend and given how things could escalate from here, it is not at 0% percent probability scenario. All right. And I was recommend anyone that Bloomberg terminal subscriber to check out the Sally's work when he's talking about the price of oil. And you can find that at BI space, OPECG on your Bloomberg terminal. So I would definitely take a look at that. Ken, I want to bring you in. You know, you've done some great work on the tanker market and the impact from the Iran war is, you know, hitting time charter rates. I'd love to hear your thoughts about, you know, where you think time charter rates could go for tankers and how the conflict in the Middle East is impacting the flow of oil. Hey, thanks for having me. Glad to be on the show. So I have a little story to tell today. What I'd like to highlight to our listeners is this really impressive spike in very large crude carrier of the RCC for short spot rates. So for context, VLCC rates for shipping could fall from the Arab Gulf to China. That's already spiked 767 percent since January 6. And that came, you know, amid the growing likelihood of military conflict and intensifying geopolitical tensions in the Middle East. Now we think that's a good chance VLCC rates might breach $300,000 and leapfrog 2019's record high of $317,000. And that in turn, back in 2019, was driven by US sanctions imposed on Chinese energy shipping companies, including car school, or allegedly transporting sanctioned Iranian crude. Now the sanctions back then effectively removed a significant portion of the global VLCC fleet from the market, you know, it took capacity out of the market. And that created a sudden shortage of available tankers, much like what we are seeing now with the sector of tankers being trapped or cornered around the straight off hormones on the horizon. The number of energy tankers that are diverting from the straight off hormones, we think that's set to climb in the coming days. Following confirmed reports of attacks on at least three ships near the mouth of the Persian Gulf, actually just yesterday, you know, we think this will likely further pressure tankers' portraits that are already searching. And in fact, you know, given the three confirmed reports of ship attacks, nearly all of the good transits have now ground to a halt. And you know, you can actually see that using the map function on the Bloomberg terminal, we literally just published a fraction note on this, you know, we included a map on that. And the map shows that tanker vessels are now staying clear of the hormones straight. And you know, vessels are stopping just before that area. So right now what they're doing is just harboring and waiting in relatively save water, so to speak. But what's speaking, things even worse is that seven out of the 12 largest maritime insurance clubs have just decided within the past 24 hours or so to seize more risk coverage for ships entering the Persian Gulf, specific adjacent waters or Iranian waters starting from Thursday. And that's according to a report put up by our colleagues at Bloomberg News. You know, this will almost certainly compound even more vessels to avoid the region as risk mount, you know, with military actions still intensifying. Now that again should drive energy shipping costs, especially for other energy tankers, even higher in the coming weeks. And you know, I want to go back a little bit to what Selvi mentioned earlier, the straight off hormones, what is this one important because it is in vital water way and maritime choke point responsible for 20% of global crude oil flows and about 25% of LNG, you know, and based on data from the US energy information administration, about two thirds of the region's crude cannot be devoted to the pipelines in Saudi Arabia and the UAE in order to avoid the straight off hormones. And the street of almost intern, you know, given that it's responsible for the quarter of the world's energy flows, these pipelines, you know, statistics show that they can only let that additional 2.6 million barrels a day or so bypass the straight. And that accounts for just an estimated 13% of the region's throughput. Now why I mentioned this is basically, you know, I'm going to highlight the fact that energy that cannot be bypassed, that cannot be used cannot bypass the straight, sorry, using the pipelines. That basically has to go through, it has to leave the region and enter the region via all time curves. So what this means is basically all time curates in particular, VLCC or super time curates. That's continue, that's set to continue spiking. And I believe we will soon find out in the coming days ahead if this materializes and how long this trend could continue. Yeah, you know, I would have mentioned, Ken, you mentioned the insurance carriers not wanting to cover ships in the region. It's worth noting these VLCC ships, they can cost $120, $130 million a piece. So these are asset, very capital intensive assets that are on the water. And obviously, you're concerned about the crew as well, more so that maybe the assets itself and it is something that ship owners have to consider if they're willing to take that risk and I would imagine that many, many are not. Ken, I just quickly, can you just talk about some of the major players in the tanker market that are like publicly traded? Within my collaboration issue, I will particularly highlight the three Japanese giants that's Nipon Yusin or NYK, Mitsui OSK or MOL and Kawasaki K-SEN or K-Line. So these three are the largest tanker shipping companies operating in the Middle East that have come up to say, you know, we are going to suspend voyages or you know, just do what is necessary to keep our ships safe by, you know, suspending transit through the straight of hormones. Of course, you know, you do have the other large players like DHG and Frontline as well. Most of these companies have, you know, suspended transit through the straight of hormones at the moment, and you know, as you mentioned earlier, to keep the crew and cargo safe. Right now it is really anyone's guess how long this situation might last. I think if you ask me, as long as missiles are flying, ships are not saving. I would mention that, you know, the two other names that you mentioned, DHG and Frontline are listed on the US Exchange DHT Space U.S. on the Bloomberg Terminal and then FRO Space U.S. equity go for Frontline, if you're interested to learn more about those companies. You know, in addition to the tanker market, you know, I'm going to talk a little bit about, you know, how it's going to impact some other markets that we cover here. You know, the fact that the region is becoming, you know, more unsafe in the Red Sea, obviously in the Suez Canal is not really going to become an alternative a couple months ago. You know, we thought that some ships would slowly return. You did hear that some carriers were returning recently because of the conflict in Iran. These like Mariske said that they're no longer going to go through the Suez Canal and that's going to take up more capacity because instead of going through the Suez, they have to go through the Cape of Good Hope around Africa. And that takes, you know, anywhere between 10 to 15 extra days. You know, container rates have been in a free fall. There's really a huge supply and demand imbalance and we thought that, you know, going back to the Suez would exasperate that. So, you know, while we're not calling for as Rosie as a picture, it's probably the tanker market in terms of rates. You know, we do think that what's going on in Iran could provide some support for the liners and maybe, you know, make earnings not as bad. They're still not going to be good, but not as bad for a lot of the container liners out there. You know, I, one of the companies I cover within my Bloomberg intelligence list is Mariske. I can't which liners do you cover? So the same three Japanese giants I mentioned earlier, they also have container shipping operations. So the three of them actually operate in container shipping under the joint venture known as ocean network alliance or OME for short. Now I think it's also worth mentioning to our readers, our listeners at this point. Something interesting that I realize through my interactions with many clients that most people were not aware of that is actually the number of container liners currently traversing the Suez Canal and Red Sea remains almost 80% lower than three Red Sea crisis levels. That is to say, before the who with these began attacking, you know, container ships using the Suez Canal and Red Sea in December, 2023. Compared to that level, we are still seeing only two in ten ships using the Suez Canal and Red Sea today. And I think this really serves to highlight the fact that, you know, ships are still sailing away diverting from this area. And as you rightfully pointed out, I do not believe on their going to consider a return anytime soon, which means to say a normalization of the Red Sea and Suez Canal shipping traffic that is not likely to be on the horizon anytime this year, at least not in the first half or third quarter. Yeah, and container ships were specifically a target for the Houthis because, you know, a lot of the ships had high value of cargo on board, more so than a dry bulk or a tanker. And also a lot of that cargo was heading to either Europe or US. So they had a big bullseye on their decks. And that is kind of why the industry has stepped away from that. You could read all our research, Ken and my research about the global marine shipping industry at BI Space S H IP is in Peter and then hit the return or go button and that will take you to our marine shipping dashboard. Well, you'll find our research and our data as well. And you know, Wayne, so, you know, I know you kind of have some more to say about some of the research that you've been putting out on, you know, what's been going on in our ran. We're going to pivot back to you. All right. Thanks, mostly. So I would be remiss if I didn't actually talk about the companies and what their ramifications are to some of where we are in the defense space. So one of the first ones I want to talk about is the US defense primes, especially Lockheed RTX and Northrop. I'll sit at the top of the center of this air missile defense and striad case capability that's underscored by the US Israel campaign in Iran. The operation reinforces the primacy of air and sea assets with crude platforms becomes one of the key pieces. It retains clear relevance, especially in a world where we're looking a lot across uncrewed systems, uncrewed aerial systems as well as others, right? Drones play a lot in the Iranian side. But if you look at how the US handled this, it was a lot of crude assets. We do have, we do have something called Lucas, which is the low cost unmanned combat air system. That was used as well, but most of the successful ones still really support the relevance back to the defense primes. Further, we also want to talk about stealth fighters. Stealth fighters remain a decisive advantage for the militaries while air defense is critical to protecting the key assets and missile production capacity is vital to both defense and attack. So that's where I think you're going to see a lot of continued sustained growth on where a lot of the defense spend has been, right? You've seen everybody, not only in the US looking to try and reach one and a half trillion dollars in defense spend. You've seen a lot in Europe trying to reach up to 5% GDP being focused on defense spend. So obviously we think those pieces are important. If this remains a short Iran engagement, we think that it does favor the Navy and Air Force spending specifically because the heavy reliance on those air and naval power supports our outlook towards continued strong defense spending in US investment in the Navy and Air Force and Space Force systems, which keeps Army and Marine programs kind of on the back burner. So if as we expect the campaign lasts for a few weeks, not months, then the prime contractors such as Lockheed, RTX, Northrop Boeing, General Dynamics should be best positioned for future programs to continue based off of this demand. We do think that Europe's going to remain a little, they're going to lay low a little bit here in the conflict, which will limit near-term implications for the defense contractors across Europe. But for like if you look at BAE and the F-35 right there, a key supplier to the F-35, which reinforces them, also reinforces stealth. But Lockheed is a sole manufacturer of fifth generation fighters. And so US and global demand should support the production rate of 156 per year. And Europe's six gen efforts right now are at least a decade away and high costs will likely drive a hybrid fleet of those, which means key F-35 suppliers will still be in this and that includes Northrop BAE and L-Free Harris. Missile production obviously becomes a big question. A lot of people ask about the Iranian side, but also you got to look at ours as well. So the missile production for RTX is AIM-120 AMRAMs and AIM-9X missiles as well as the Lockheed's joint attack surface-to-surface missile, JASM, and Boeing's JDAMR key. Because these high-end operations, the more that we use right now becomes more important in terms of whether or not we can actually replenish these in need, especially for some type of operational contingency, especially in 2027. Think about areas around the world, especially in the Pacific where 2027 may be a hotbed for more activity as well. And then last, the short of the fight, the better it's going to be for us based off of that because the high expenditure of those missiles can eat into that readiness for those other global contingencies. So a general dynamic selectric boat and Huntington Angles becomes a key one. Obviously, you see a lot of, especially in the Trump administration right now, they use the Navy a lot. Venezuela was a key piece of this as well as what's gone on with the build-up in the Middle East as well. So you're seeing a lot of capability there. It shows the demand for shipbuilding. You've seen that in the reconciliation bill with an additional $29 billion going towards shipbuilding on top of everything else. The call for additional Virginia class submarines as well as Arleigh Burke class destroyers becomes a key piece of this as well. And then even looking at potential low-cost frigates in the future and all that, which supports Fincantary and some of these others as well in the constellation class development as well. So we do have that research out on the terminal as well. But definitely, I've already left to ask me about the geopolitical side and I always want to make sure that they know that I do spend some time along with our defense team on some of the companies as well. No, absolutely. And thanks so much for that, Wayne. This podcast is talking transport. So I'd be remiss if I didn't mention some other modes of transport and kind of the ramifications of what's going on in Iran since the air space is closed around most of the Middle East. This is going to impact air freight and air freight rates. We think it's going to be an incremental positive for rates. While we don't think it's going, they're going to go sky high, get it a little pun there. Like they are with the tanker industry. But we do think it will provide some upward pressure. And then that is going to be good and bad for the parcel carriers like FedEx, UPS and DHL. The good is that they might have some ability to increase rates a little bit on the bad. It could impact in terms of their volumes and the way they optimize their network, which could increase costs. Also, in addition to covering those names, I covered the railroads and trucking names here at Bloomberg Intelligence, that dashboard's BI space RAL or BI space TRCK go. And what we're saying there is that the impact is obviously not from the region, but kind of like the derivative play. Higher oil prices will mean higher diesel prices. The rail industry has fuel surcharges in place. So it can be anywhere from a week to 60 days. But it's really longer for the commodity car loads. And when prices for fuel increases significantly, that becomes a drag on margin. So the lag impact is a negative. It's not as bad for the truck load or the LTL space, but it could be somewhat of a head when we're concerned about if that oil prices do remain high for longer. That could impact consumer spending, which here in the US, it's been really good at the higher income levels and okay, not great for the lower income levels. And it would impact the low, the mid to lower income levels more so just because if it's part of their discretionary spending. So people might have to rethink, you know, volume expectations for at least the first quarter or second quarter, if this war is prolonged and oil prices remain higher. So that's kind of our take on what's going on in Iran and the impact to transportation. So thank you, Ken Wayne and Sally for your time and insights today. I know you've all been very busy over the last couple of days putting out great research and insights onto the terminal. This was really great and we should do it more often. I also want to thank you for tuning in. If you liked the episode, please subscribe and leave review. We've lined up a number of great guests for the podcast. So please check back to your conversations with C-suite executives, shippers, regulators and decision makers within the freight markets. Treat more BI research on the impacts of the US Iran conflict. Please go to BI Iran. Go on your terminal. I'd also like to thank our podcast editing team, Miriam Turoor and Edidia Somane for their help pulling this podcast together. This is Lee Klaskael signing off and thanks for talking transport with me. Talk to you soon. This is Special Agent Regal, Special Agent Bradley Hall. The time is approximately 11.15 AM about to start a central telephone call with Dr. Dawa Seng. China's Ministry of State Security is one of the most mysterious and powerful spy agencies in the world. But in 2017, the FBI got inside. Wait. That's a nice thing, huh? Hey, you're not super on your phone. I've never seen that much evidence in my entire career. And I don't think we'll ever see that much evidence again. I now have several terabytes of an MSS officer no doubt, no question of his life. And that's the unicorn. This is a story of the inner workings of the MSS and how one man's ambition and mistakes opened its vault of secrets. Listen to the six bureau from Bloomberg Podcasts starting on February 13th on the IHR radio app, Apple Podcasts or wherever you get your podcasts.