Today (June 20), the Commerce Ministry convened with shipping lines and container associations to evaluate the effects of the prolonged Iran-Israel conflict along with other geopolitical developments on India’s trade.
According to government sources, representatives from the shipping and air cargo industries reported that the situation in the Strait of Hormuz
is presently stable, with a ship reporting system established to monitor any incidents. While freight and insurance rates are under close observation, the government is seeking all potential alternatives for an appropriate response, as the commerce secretary underscored the importance of evaluating the impact of the evolving situation on India’s trade.
Sources in the industry warned that if the conflict extends beyond Monday (June 23), it could disrupt cargo movement to Russia, CIS countries, and Afghanistan from Iran’s Bandar Abbas port.
The Federation of Indian Export Organisations (FIEO) noted that Bandar Abbas port remains operational for cargo movement to these countries, including Uzbekistan, which is now only accessible through Bandar Abbas due to the closure of the Karachi port. The industry emphasized the necessity of enhancing Chabahar’s connectivity to Uzbekistan by collaborating with local entities to mitigate losses should Bandar Abbas’s operations be impacted.
Citing increased freight charges and longer transit times for Red Sea ports such as Aqaba, Beirut, and Lattakia, industry sources mentioned that exporters using the Red Sea route are rerouting shipments to ports including Jeddah and Alexandria.
Reports indicate that exports to Saudi Arabia are on the rise driven by the Neom city construction initiative. Amid concerns that exports to Gulf and Mediterranean countries may suffer due to restricted ship movement in the Persian Gulf, the industry is advocating for a focus on the India-managed Chabahar Port, which has connectivity through Dubai and a direct link from Kandla Port.
With exporters postponing shipments and buyers placing orders on hold, there are worries about goods being stuck at ports, resulting in significant demurrage costs. For example, ocean freight from Indian ports to EU and Mediterranean ports has risen by $1,000 per TEU.
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(Edited by : Shoma Bhattacharjee)
