US-Israel-Iran war: Exporters flag rising costs, delay in shipments

Amidst escalating tensions in West Asia with the US and Israel attacking Iran, Indian exporters have sought government help to ensure a safe package of shipments and exports.

Rising costs and long delays in shipments are proving to be a pain point for domestic exporters in the conflict that US President Donald Trump has said could go on for another four weeks. 

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The Department of Commerce on Monday held a fresh consultation with all stakeholder ministries, key logistics and trade facilitation partners to review the emerging geo-political situation and its potential impact on India’s export-import (EXIM) cargo flows, including the export ecosystem.   “During the meeting, it was agreed amongst the stakeholders to maintain close, real-time coordination for monitoring route and capacity developments, surcharges, and equipment availability,” said an official release after the meeting.

Also read: Stocks may drop further as West Asia's conflict hits Indian bottomlines, supply chains   Mechanisms for facilitation of time-sensitive export segments such as perishables, pharmaceuticals, and high-value manufactured exports were also discussed. The meeting emphasised strengthening facilitation at ports and internal container depots and ensuring smooth cargo evacuation to avoid congestion and extended dwell times.   Exporters said that with the crucial Strait of Hormuz caught in the conflict, shippers have imposed an Emergency Conflict Surcharge ranging from $2,000 to $4,000 per container to offset sharply rising war-risk insurance premiums, additional crew allowances, security arrangements, and higher operating costs.   Many carriers are also choosing to avoid the Suez Canal and the Red Sea, rerouting vessels via the Cape of Good Hope, which adds about 10-15 days to Europe-bound cargo and even longer to North America. This increases bunker consumption and effective vessel capacity, noted SC Ralhan, President, Federation of Indian Export Organisations (FIEO). Freight charges are also likely to increase due to this.   Further, with the ongoing Ramadan and upcoming Eid festival, perishable goods for the Gulf markets are also facing risk. For the cargo that was to be sent and is now stuck, exporters do not have storage facilities and are hoping for government intervention.   Cargo that has already been shipped sailing but is yet to cross the Red Sea presents another layer of concern. Exporters are worried that the longer-than-anticipated journey would delay presentation of documents under letters of credit or other payment terms and would impact liquidity.   Meanwhile, A Sakthivel, Chairman, Apparel Export Promotion Council, has written to the Secretary, Ministry of Civil Aviation and has requested for the waiver of demurrage charges on export cargo due to flight disruptions arising from the ongoing West Asian crisis.   In his representation, Sakthivel noted that the prevailing situation has significantly disrupted international flight operations, resulting in route restrictions, airspace closures, flight diversions, schedule irregularities, and operational constraints at certain overseas airports.   “These unforeseen developments have directly impacted the timely movement of export cargo from Indian airports to various international destinations. As a consequence, export consignments are currently stranded at multiple airport cargo terminals across India. The delays are solely attributable to external and unforeseen factors beyond the control of exporters, customs brokers, freight forwarders, or air cargo agents."