Shippers expect cost spikes on reroutes, insurance

With the closure of the vital trade route through the Strait of Hormuz by Iran’s Islamic Revolutionary Guard Corps (IRGC) amid the country’s military conflict with Israel and the United States (US), India’s shippers and freight players are expecting West Asia-bound cargo to pile up at ports, and cost spikes owing to rerouting and insurance.

- DHRUVAKSH SAHA

Most large shipping lines have cancelled transits through the Strait of Hormuz following heavy military action and the subsequent killing of Iran’s supreme leader, Ayatollah Ali Khamenei, on Saturday night, and Indian exporters and freight forwarders are finding themselves caught up in yet another geopolitical turbulence.

“Exports of fruits, vegetables, and meat products — which are ferried via air — are severely impacted. Moreover, for future sea shipments, insurance companies are not offering any insurance as of Sunday. We will find out on Monday whether force majeure applies,” said Dushyant Mulani, director, Khimji Poonja Freight Forwarders, and former chairman, Federation of Freight Forwarders Associations of India.

Mulani said the development had come at a time when ships had begun returning to the Red Sea, providing some relief, as the industry had been taking a longer route via the Cape of Good Hope since 2023.