Red Sea risks resurface: Exporters warn of shipment delays, higher freight and insurance costs amid Middle East conflict

Indian exporters have flagged fresh concerns over logistics disruptions and rising costs after the US and Israel launched strikes on Iran, triggering retaliatory attacks and escalating tensions across the Middle East.

Industry bodies said prolonged instability in the region could disrupt key shipping corridors, push up marine insurance premiums and increase transportation costs, affecting outbound shipments to the US and Europe, PTI reported.




Federation of Indian Export Organisations (FIEO) President SC Ralhan said the conflict has already begun impacting global logistics channels. “Air routes are being altered, and maritime trade through the Red Sea and key Gulf straits faces heightened uncertainty. If diversions become prolonged, shipments may increasingly have to reroute via the Cape of Good Hope, adding an estimated 15–20 days to transit time for Europe and the United States,” he said.

Ralhan added that heightened geopolitical risks typically translate into higher marine insurance premiums, raising transaction costs for exporters. “A prolonged disruption could also exert upward pressure on global energy prices, with consequential implications for input costs and currency stability, including pressure on the Rupee,” he said.

The apprehensions follow retaliatory strikes by Iran targeting several American military bases in the Middle East, including in Qatar, Kuwait and the United Arab Emirates (UAE), after the joint attack by the US and Israel.

Apparel Export Promotion Council Chairman A Sakthivel echoed similar concerns. “We are worried that our shipment may get delayed due to this tension. We may have to take long routes to send our goods to Europe, USA and other western countries,” he said.

India has urged all sides to exercise restraint and avoid escalation, asserting that the sovereignty and territorial integrity of all countries must be respected.

Exporters recall that tensions in 2024 following the Israel-Hamas war had severely impacted shipments via the Red Sea route, forcing vessels to take longer detours. An exporter from the leather sector said, “We may face similar problems now if the war continues for long.”

The Red Sea and Bab-el-Mandeb Strait form a critical shipping artery for India’s trade. Nearly 65 per cent of India’s crude oil imports from countries such as Iraq and Saudi Arabia pass through the Suez Canal. The route via the Arabian Sea, Red Sea and Suez Canal remains shorter and faster than the Cape of Good Hope passage around Africa, making it the preferred option for most shipping companies.

However, if hostilities intensify, vessels may avoid the Suez Canal and take the longer Cape route, potentially adding 14–20 days to transit time and significantly increasing freight and insurance costs.

The Red Sea crisis in late 2023, triggered by attacks on cargo vessels by Iran-backed Houthis near the Yemeni coast, had disrupted global supply chains. The Suez Canal route accounts for about 30 per cent of global container trade.

Shipping companies are likely to raise freight rates for shipments from the Indian subcontinent to North Europe in response to increased risks and operational costs.

“Geopolitical situation is very fluid at present. It is keeping us on our toes and exporters are completely shattered, they do not know what is going to happen next. We need immediate government support,” said Sharad Kumar Saraf, Mumbai-based exporter and founder chairman of Technocraft Industries India.

He added that shipping costs could jump and consignments may take longer to reach Europe and the US if vessels are forced to encircle Africa via the Cape of Good Hope.

Exporters said they are closely monitoring developments, warning that sustained instability in these critical trade corridors would require calibrated policy support to help maintain competitiveness in global markets.