Exporters Grapple with West Asia Crisis: Freight Costs Soar

Exporters are experiencing a 300% rise in sea freight due to the West Asia crisis. To alleviate this, more small vessels will operate between India and Gulf countries starting April 15. The Federation of Indian Export Organisations (FIEO) is engaging with authorities to address the financial impacts on exporters.

Exporters are reeling from a dramatic rise in sea freight costs, driven up by the ongoing West Asia crisis. With expenses climbing as high as 300%, measures are being implemented to mitigate the impact. From April 15, an increased number of small vessels will handle shipments between India and Gulf countries, according to Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO).

During a recent briefing with the Directorate General of Shipping, the impact of the US-Israel joint offensive on Iran was at the forefront of discussions. Roughly 400 exporters outlined their challenges amid disrupted container movements. The FIEO confirmed the plan to boost the number of Non-Vessel Operating Common Carriers (NVOCCs) servicing routes to the Middle East.

Additional costs stemming from the crisis include a contingency surcharge imposed by foreign shippers, ranging from USD 1,500 to USD 4,000, escalating the cost of freight. In parallel, airfares have surged, with routes like Kolkata to the Middle East witnessing rates more than double. Sahai mentioned discussions with the RBI to tackle payment delays and banking challenges, urging recognition of the situation as a force majeure event to reduce contractual penalties for exporters.

(With inputs from agencies.)