FIEO says altered sailings, Cape reroutes and $4,000 conflict surcharge are delaying shipments and squeezing exporters’ cash flows as West Asia tensions disrupt key trade routes.
Indian exporters are staring at shipment delays, rising freight costs and mounting margin pressure as the escalating West Asia conflict disrupts key maritime routes, the Federation of Indian Export Organisations (FIEO) said on Monday.
Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), told Firstpost that exporters are currently facing a three-fold challenge: containers stuck mid-transit, congestion at ports and inventory build-up at factories.
“Some of the containers have already been handed over to the shipping lines, the sailing has happened, but they have not yet crossed the Middle East area. Therefore, exporters are concerned with the safety of the container,” Sahai said.
Apart from safety concerns, exporters are bracing for payment delays. Since export proceeds are typically realised once goods reach buyers or are sold onward, any increase in transit time stretches working capital cycles.
“If the transit time goes up, definitely the period of delay will go up,” he noted, warning that liquidity stress could intensify if disruptions persist.
Shipping schedules have been altered or temporarily halted, leading to a buildup of containers at Indian ports. Simultaneously, consignments ready for dispatch are accumulating at factories as sailings through the Middle East are paused or rerouted.
For Europe- and US East Coast-bound shipments, several shipping lines are considering detours via the Cape of Good Hope, adding 10–15 days to transit time. Such rerouting significantly raises operational costs.
“If the shipping lines raise the freight for this, it will impact the profitability of the exporters,” Sahai said. Drawing from past crises, he cautioned that freight rates can spike sharply in the early phase of disruptions. “In the initial days, freight goes up by 150 per cent to 200 per cent also,” he added.
Exporters of perishable goods such as fruits and vegetables are among the worst affected, particularly during Ramadan when demand in Gulf markets peaks. Shipping lines have imposed emergency conflict surcharges of up to $4,000 per container in some cases.
“$4,000 per container is a very high amount. A significant portion has to be absorbed by Indian exporters. That’s why the bottom lines are likely to take a hit,” Sahai said.
The Middle East is a critical trade partner for India, accounting for roughly 15 per cent of the country’s total trade, valued at around $180 billion. Prolonged tensions could also push up energy prices, increase domestic transport costs, and weaken export competitiveness.
Much now hinges on the duration and escalation of the conflict, Sahai said, expressing hope that diplomatic efforts would restore stability and normal shipping flows quickly.
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