PIF-owned Folk Maritime pauses growth as shipping costs jump

Folk Maritime has temporarily paused its expansion as geopolitical disruption raises operating costs by as much as 40% and makes it harder to secure additional shipping capacity, CEO Poul Hestbaek tells EnterpriseAM. The Public Investment Fund-owned shipping company had been expanding across the Middle East, Indian subcontinent, Southeast Asia and East Africa, but Hestbaek says it has “flattened out” that growth until market conditions normalize.

The problem is less about demand and more about finding capacity at a price that makes sense. “Everything is high. Shipment cost, cost of vessels, the cost of leasing vessels, the cost of fuel, everything is high. The cost of ins., everything is high,” he tells us.

The playbook: Folk isn’t looking to capitalize on the disruption through aggressive expansion. Hestbaek says its priority as a Saudi PIF-owned company is covering its additional costs while maintaining supply security into the Kingdom.

The backdrop: The disruption comes as the Middle East war squeezes two of the region’s most important shipping arteries. The US-Israel conflict with Iran, which began in February, has severely disrupted traffic through the Strait of Hormuz, while Iran-aligned Houthi forces in Yemen have expanded their reach around the Bab Al Mandab Strait, the southern gateway to the Red Sea. The Houthis seized the strategic port of Al Makha and reached Perim Island in September, escalating risks for vessels using a route that connects the Red Sea with the Indian Ocean.

The result has been longer voyages, tighter vessel availability, and higher fuel, ins., and chartering costs for shipping companies, precisely the pressures Folk says are now forcing it to slow its expansion.

How much higher are we talking? Folk’s overall costs have risen around 30-40%, while some individual expenses have more than doubled, according to Hestbaek. The company has been able to pass much of the increase on to customers, limiting the financial hit, but rapidly changing conditions are making planning increasingly difficult.

And it’s slowing volumes: Folk had targeted around 250k containers in 2026, equivalent to roughly 5k a week. It is currently moving closer to 4k a week and expects to finish the year below target as congestion and delays stretch journey times. A round trip between India and the Red Sea that would normally take around 20 days can now take 30, Hestbaek said.

The bottleneck isn’t cargo: Folk currently operates six vessels, five of which it owns, alongside leased ships and capacity bought from partners. Its vessels are full, Hestbaek says, meaning the constraint is how quickly ships can move through increasingly congested ports.

Vessels aren’t cheap, either: Folk is holding back from adding ships as available vessels become both scarce and expensive. Hestbaek said vessel prices have roughly doubled compared with historical pre-Covid averages, while the limited ships coming to market are often lower quality.

The Red Sea pivot: The disruption has also reshaped where Folk deploys its fleet. Around 75% of its capacity is now in the Red Sea, compared with roughly half before the conflict. Hestbaek said the company remains busy there as larger shipping lines gradually return vessels to the Suez route, creating demand for feeder services moving cargo around the region.

Folk is testing crossings through the Strait of Hormuz rather than operating a consistent service. Its most recent crossing was in September and went through normally, but decisions are being made week by week using intelligence providers to assess security conditions.

Bab Al Mandab is proving more difficult. Folk has not crossed the strait “for a while,” Hestbaek said, citing uncertainty over potential Houthi targets. “We want predictability, and for the time being, we don’t have that.”

What’s next: The growth pause doesn’t change Folk’s longer-term plan. The company is sticking to an organic growth strategy through the end of the decade, with acquisitions or consolidation potentially entering the picture only after it reaches its targeted scale. It also plans to expand partnerships with Saudi logistics providers during 2027 rather than building out warehousing and other land-based services itself.