More than a month into the West Asia crisis triggered by the US–Iran conflict, shipping and trade remain in deep turmoil, marked by extreme volatility and uncertainty.

The disruption of the Strait of Hormuz — a critical artery for global energy flows — has severely impacted maritime traffic, pushing freight rates up nearly fivefold, inflating war-risk insurance premiums by 10X, and imposition of emergency surcharges across key trade lanes.

Prior to the crisis, around 150 vessels transited the strait daily; that number has now dropped to just four or five. Similarly, deliveries are now arriving two to three weeks behind schedule, as vessels reroute via longer passages such as the Cape of Good Hope, increasing both transit time and costs.

The United Nations said on Tuesday that nearly 2,000 ships, including oil and gas tankers, bulk carriers, cargo vessels and six cruise liners, with close to 20,000 seafarers, are stranded in the Persian Gulf, unable to pass through the narrow strait amid the ongoing conflict. Iran, which borders the waterway to the north, has said passage will be allowed only to “non-hostile” ships.

Cargo movement to West Asia has come to a near halt following the suspension of services across parts of the region, while outbound shipments to the US and Europe continue to face significant delays.

The United Arab Emirates remains India’s largest trading partner in the region, with bilateral trade nearing $90 billion. India’s exports to the UAE — including engineering goods, pharmaceuticals, textiles and leather products — account for nearly $40 billion, with over 90 per cent transported by sea.

Industry experts say the prolonged confrontation is reshaping global logistics. J Krishnan, Partner at Chennai-based S Natesa Iyer Logistics LLP, noted that supply chain disruptions have hit Indian trade both inbound and outbound, with cancellations and detours around Africa extending voyage times and inflating costs. Container shortages are further constraining trade flows.

Jagannarayan Padmanabhan of CRISIL Intelligence described the situation as a structural shift away from “efficiency-first” maritime trade toward a regime of “selective transit,” where shipping routes are increasingly influenced by geopolitics.

War-risk premiums for a single Gulf transit have surged from about 0.2 per cent to as high as 3–4 per cent of vessel value, significantly altering the economics of global shipping. For India, this amounts to a systemic “logistics tax,” raising the landed cost of crude shipments and effectively tightening global fleet availability.

Exporters are already feeling the strain. Kumar Duraisamy, Managing Director of Tiruppur-based Eastern Global Clothing, said operational costs have risen nearly fivefold, with transit times to the US stretching to 45–70 days from about a month earlier.

Ram Ganesan, Managing Director of Madurai-based Paramount Textiles, added that freight rates on some routes have surged up to 400 per cent. Disruptions in key maritime corridors have slowed cargo movement to Europe and the Gulf — major markets for Indian textiles — affecting trade volumes. Rising energy, shipping and raw material costs are expected to push retail garment prices up by 15–20 per cent.

Source: The Hindu Business Line 

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