INTERVIEW: ARASCO maintains Gulf food supply amid maritime disruptions

Amid heightened geopolitical tensions in the Middle East, disruptions to key trade routes have raised concerns over the stability of food and agricultural supply chains in the Gulf region. With the Strait of Hormuz remaining a potential flashpoint, companies are reassessing logistics and sourcing strategies to ensure continuity of essential imports.

Against this backdrop, Arabian Agricultural Services Company (ARASCO) is actively managing its procurement and distribution operations. In a March 31 interview with Platts, part of S&P Global Energy, Anis Alam, Chief of Grain Procurement at ARASCO, shared the company's approach to navigating these challenges.

This Q&A has been edited for clarity.

Platts. Given the disruption in the Strait of Hormuz, how prepared are Saudi Arabia and the wider Gulf to sustain food supplies if maritime disruptions continue for months?

Anis Alam: Saudi Arabia is fully prepared, not only for itself but for all Gulf countries. The borders have been opened for neighboring countries -- Kuwait, Bahrain, Qatar, the UAE -- to bring goods by air, sea or land, with no duties or restrictions, allowing free movement of cargo through all available channels.

On the logistics side, multiple west coast ports such as Yanbu, Jeddah and King Abdullah Port are fully operational, and airports in Riyadh, Jeddah, Mecca and Medina are running 24/7 for perishable cargo. The country has mobilized logistics, inland transport and distribution networks. There are delays and higher costs, but no disruption in supply.

Platts: Are current strategic reserves designed for short-term shocks or prolonged geopolitical blockades?

Anis Alam: The system is equipped to handle short-term disruptions, but a prolonged blockade would create pressure. If it continues for a month, definitely it will create panic everywhere.

However, the more severe impact is expected outside the Gulf. Before panic emerges locally, there could be significant stress in Asian markets such as India, Pakistan, Bangladesh, and Sri Lanka, which are more vulnerable to supply shocks.

Platts: Do you see this crisis accelerating a structural shift away from a single-route dependency on Hormuz?

Anis Alam: Yes, this is already happening. Governments in the region are reassessing logistics strategies and expanding alternative infrastructure. There is increasing focus on developing additional port capacity and diversifying supply routes.

Within ARASCO, there is also consideration of building warehousing capacity on the west coast to strengthen flexibility, reflecting the view that such disruptions are not isolated events and could recur.

Platts: What alternative logistics are realistically scalable -- Red Sea corridors, land bridges or diversified sourcing?

Anis Alam: The response is multi-pronged. Cargo is being diverted to Red Sea ports, and all available logistics channels are being utilized.

The approach is operationally straightforward, involving diversion of vessels to the west coast. While congestion is possible due to increased traffic, it remains manageable. The main impact is cost, which has effectively doubled.

Platts: How is ARASCO adapting its sourcing strategies for feed, grains and inputs amid disruptions in global flows?

Anis Alam: Sourcing itself remains stable. The company works with established global trading houses for corn, soybeans, barley and feed wheat, and procurement continues in line with international market conditions.

The company does not anticipate sourcing challenges due to its established supplier base. The key challenge lies in logistics, particularly inland transportation, which is being strengthened. Trucking capacity is expanding, with fleets increasing utilization to meet demand.

Platts: With disruptions in corn and soybean imports, how vulnerable is the feedstock and poultry sector?

Anis Alam: The poultry sector is more exposed due to its reliance on imported feed and is expected to face a greater impact compared to other segments.

However, ARASCO currently holds inventory coverage through May and continues to procure for upcoming months. The company is also supporting other feed millers by sharing supply where possible, without seeking to benefit commercially from the situation.

Price increases have been limited so far, with only gradual adjustments to avoid burdening consumers.

Platts: How smooth is vessel rerouting, and how much additional time does it take?

Anis Alam: Rerouting operations are functioning efficiently, supported by established alternative channels with sufficient capacity.

However, transit times have increased. Shipments now take approximately four to five additional days compared to routes through Hormuz.

Platts: How are Saudi authorities managing food security concerns?

Anis Alam: A dedicated government food security body is working closely with private sector participants to ensure supply continuity. Warehousing levels are being monitored, and companies are being supported in resolving logistical bottlenecks.

Authorities are actively ensuring adequate stock levels and providing direct support to companies facing operational challenges. Customs and port clearance processes have been simplified to facilitate faster movement of goods, with a focus on accelerating flow rather than documentation procedures.

The government is also providing financial backing to offset increased costs, ensuring that importers can continue operations without disruption.

The ministry responsible for food security was contacted by Platts for confirmation of these measures, but no response was available at the time of publication.