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Global Conflict Escalation Poses Supply Chain and Tourism Risks for Hawaii Businesses

·5 min read·👀 Watch

Executive Summary

Heightened geopolitical tensions in the Middle East, including direct military action, introduce immediate risks of global supply chain disruptions and could dampen international travel sentiment within the next 30 days. Businesses reliant on imports or international tourism should prepare for volatility.

  • Small Business Operators: Potential for increased import costs and delayed inventory.
  • Tourism Operators: Risk of decreased bookings due to global travel anxiety.
  • Agriculture & Food Producers: Possibility of higher shipping costs and slower delivery times for inputs and exports.
  • Investors: Increased market volatility and potential impact on consumer discretionary spending.
  • Action: Monitor shipping costs and international travel advisories; review inventory levels.

Watch & Prepare

High Priority

A major international conflict could cause immediate and cascading supply chain issues and impact tourism confidence within 30 days.

Monitor the [U.S. Department of State travel advisories](https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories.html/) and [major shipping company announcements](https://www.maersk.com/news/) for significant changes affecting Pacific routes. If travel advisories for key source markets are elevated to 'Level 3: Reconsider Travel' or above, or if major shipping companies declare force majeure on Pacific routes, businesses should activate contingency plans for inventory management and visitor engagement.

Who's Affected
Small Business OperatorsReal Estate OwnersInvestorsTourism OperatorsAgriculture & Food Producers
Ripple Effects
  • →Increased global shipping costs and potential delays → Higher import prices for consumer goods and business inputs → Direct impact on inflation and operating margins for Hawaii businesses → Reduced consumer purchasing power and increased cost of living for residents → Potential decrease in discretionary spending on local goods and services, further straining small businesses.
Close-up of a vintage globe focusing on Canada and the USA with a warm tone.
Photo by Kuba Karoń

Geopolitical Conflict Escalation Poses Supply Chain and Tourism Risks for Hawaii Businesses

Significant escalation of military conflict involving major global powers introduces immediate threats to Hawaii's fragile supply chains and tourism-dependent economy. Businesses should anticipate potential price volatility for imported goods and a possible decline in international travel interest in the short to medium term.

The Change

On February 28, 2026, the U.S. and Israel launched a major attack on targets across Iran. This event signifies a substantial increase in geopolitical instability in the Middle East. Such conflicts have historically led to disruptions in global shipping routes, fluctuations in oil prices, and a general decrease in international travel confidence as global security concerns rise.

Who's Affected

  • Small Business Operators: Businesses relying on imported goods for inventory (retail, restaurants, manufacturing) face an elevated risk of increased costs due to shipping disruptions, potential fuel surcharges, and longer lead times. Supply chain fragility could lead to stockouts and impact operational continuity.
  • Tourism Operators: Hotels, airlines, tour providers, and vacation rental businesses are vulnerable to a decline in international visitor arrivals. Global news of major conflicts can create travel anxiety, leading to booking cancellations or a general slowdown in demand, particularly from key overseas markets.
  • Agriculture & Food Producers: Farmers and food producers who import fertilizers, equipment, or specialized feed, or who export products, may experience increased shipping costs, delays, and potential trade route challenges. Fluctuations in global energy prices can also impact the cost of farming operations.
  • Investors: Portfolio managers and investors should anticipate increased market volatility across various asset classes, including equities and commodities. Significant geopolitical events can trigger risk-off sentiment, affecting investment valuations and the availability of capital for local ventures.
  • Real Estate Owners: While direct impact is less immediate, prolonged global instability can indirectly affect the commercial real estate market through reduced business investment and potential shifts in demand for office or retail space if tourism or import-dependent businesses contract.

Second-Order Effects

Increased global shipping costs and potential delays → Higher import prices for consumer goods and business inputs → Direct impact on inflation and operating margins for Hawaii businesses → Reduced consumer purchasing power and increased cost of living for residents → Potential decrease in discretionary spending on local goods and services, further straining small businesses.

What to Do

Given the "WATCH" action level, immediate concrete actions may not be required, but proactive monitoring and contingency planning are essential within the next 30-60 days.

  • Small Business Operators: Begin monitoring international shipping indices (e.g., Baltic Dry Index) and fuel surcharges from major carriers. Review current inventory levels and assess critical stock needs. Explore diversifying suppliers where feasible, though this may be a longer-term strategy.
  • Tourism Operators: Closely monitor international travel advisories from key markets and major airline capacity reports. Track booking trends and cancellation rates. Consider adjusting marketing spend to focus on resilient domestic or closer markets if international sentiment deteriorates.
  • Agriculture & Food Producers: Stay informed about global commodity prices, particularly oil and fertilizer. Liaise with shipping partners regarding potential route changes or delays. Assess if current inputs have sufficient lead time for anticipated needs.
  • Investors: Review portfolio diversification and risk exposure, particularly to sectors sensitive to global events (e.g., travel, energy). Monitor market sentiment indicators and stay abreast of economic forecasts that incorporate geopolitical risk.

Action Details: Monitor the U.S. Department of State travel advisories and major shipping company announcements for significant changes affecting Pacific routes. If travel advisories for key source markets are elevated to "Level 3: Reconsider Travel" or above, or if major shipping companies declare force majeure on Pacific routes, businesses should activate contingency plans for inventory management and visitor engagement.

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