400,000 tons stuck in transit: Iran conflict disrupts India's basmati exports

About 400,000 metric tons of Indian basmati rice are stuck in transit as the Iran conflict disrupts shipping routes across the Middle East and sends freight costs soaring, Reuters reported on Tuesday, citing trade officials. Export deals have reportedly dried up since the weekend strikes, and container freight rates have more than doubled.

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India is the world's largest exporter of premium basmati rice. Buyers in the Middle East - including Saudi Arabia, Iran, and the United Arab Emirates - account for more than half of its shipments.

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"Around 200,000 tons of basmati rice are stuck in transit, and an equal amount is stranded at Indian ports as the war has disrupted shipping routes across the Middle East," Satish Goel, president of the All India Rice Exporters' Association (AIREA), told Reuters.

Exporters had already moved stocks to ports but cannot ship to the Middle East because of rising container freight costs, and no alternative market can absorb the volume, the association chief said.

On Monday, Iran's Islamic Revolutionary Guard Corps shut the Strait of Hormuz for shipping traffic and warned that any vessel attempting to pass through would be set on fire, according to Iranian state media.

The Strait of Hormuz is one of the world's most critical shipping corridors, serving as the main maritime gateway between the Persian Gulf and global sea lanes. A significant share of commercial cargo - including energy shipments and container traffic bound for Asia - moves through this narrow passage.

The United Arab Emirates, including Dubai, lies just outside the strait, making it a key transshipment hub for trade with the Middle East. While Saudi Arabia and the UAE operate limited pipeline routes that bypass the waterway for oil, most cargo vessels moving through Hormuz - including container ships - have no practical alternative route if the strait is disrupted, according to the U.S. Energy Information Administration.

Tankers and container ships are avoiding the waterway as insurers cancel coverage for vessels, while global shipping rates have surged.

Exporters are not taking new orders from the Middle East and are prioritising shipments under existing contracts, a New Delhi-based dealer with a global trading house told the news agency. 

India's rice exports usually exceed the combined total shipped by the world's next three biggest exporters - Thailand, Vietnam, and Pakistan.