Freight Costs Surge 250% as West Asia Crisis Disrupts Exports

Exports to the Middle East have been severely affected since February 28, though exporters hope that some ships will begin sailing this week via an alternative route from Mundra Port to Jawaharlal Nehru Port Trust (JNPT) and then to Khorfakkan Port in Sharjah. Some flights are also carrying limited freight.

However, the absence of shipments for the past 10 days is expected to affect India’s overall exports in the March quarter.

Freight costs have surged sharply due to the Emergency Conflict Surcharge imposed by shipping lines. According to Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), the normal freight rate between JNPT and Dubai is around $700–$800 for a 20-foot container. However, the surcharge alone is about $2,000, roughly 250 per cent of the base freight cost.

Exporters have expressed concern that these charges are being applied even to shipments that have already been billed or have reached their destination, which they consider unfair.

Sahai said shipping companies should act responsibly and avoid exploiting the situation, particularly when exporters are already facing heavy losses.

Shipping operations were suspended mainly due to security concerns around the Strait of Hormuz, a crucial maritime route affected by tensions in the region. However, there are signs of gradual recovery.

Sahai said some shipping lines are expected to resume services from March 8 via an alternative route from Mundra to JNPT and then to Khorfakkan. If congestion occurs there, cargo may be redirected to Fujairah. The route avoids the Strait of Hormuz, making it comparatively safer.

Initially, priority will be given to agricultural and perishable products, which are most vulnerable to delays due to their limited shelf life.

Some limited cargo movement is also taking place through flights carrying freight in the aircraft belly while evacuating passengers. However, alternative shipping routes and air freight options remain extremely limited.

Finding alternative markets for affected goods is also difficult. The Middle East is a major destination for Indian food products because of the large Indian diaspora and similar consumer preferences.

For instance, about 80 per cent of India’s Basmati rice exports go to the region. Without access to this market, exporters are forced to sell products domestically, which has already led to price drops for items such as bananas.

The overall impact on exports will depend on how long the crisis continues. If the situation stabilises quickly, delayed shipments may be cleared in the coming months. However, the 10-day disruption alone could significantly reduce exports in March, as such a gap accounts for nearly one-third of monthly export activity.

The Government of India has responded by forming an inter-ministerial task force on March 3 to address exporters’ concerns.

Authorities are coordinating with customs, ports, banks and other stakeholders to expedite cargo returns, reduce port charges and provide financial relief to exporters whose payments may be delayed.

Banks may also soon offer credit relaxations, while Sahai emphasised that all stakeholders—including shipping lines—must cooperate responsibly to minimise the long-term impact on trade.