The 15-day ceasefire for the West Asia war offers a temporary window for ships stranded due to the closure of the Gulf of Hormuz to exit the region. This may help exporters cut their losses and allow fresh cargo bookings for trade to normalise, but only longer-term peace will salvage the situation, according to exporters and experts.
More than 800 ships are waiting to cross the Hormuz Strait, 16 of which are Indian. “It will take 1.5 to 2 months for the entire backlog to clear and for normal cargo movement to resume,” said Padmanabhan Babu, CEO and Founder of Lexship. Lexship provides crossborder logistics services.’
Just a day before the war began on March 1, around 140 ships crossed the strait which by the end of the month had reduced to 5 a day. On the first day of the ceasefire there were no large-scale crossings as attacks still continue in the region.
India steps up efforts to ease shipping disruptions
“We are trying our level best to bring our ships as early as possible, as well as sending vessels again to bring the cargo from there,” said Mukesh Mangal, Additional Secretary in the Department of Ports, Shipping and Waterways.
Apart from Hormuz there have been disruptions in the Red Sea routes which has strained India’s exports to the Gulf Cooperation Council (GCC) region, totaling $58.87 billion in 2024-25.
“The ceasefire and reopening of the Strait of Hormuz bring immediate relief to exporters by easing shipping disruptions, high freight rates, and insurance costs. While this should help normalize logistics in the short term, exporters will remain cautious given the temporary nature of the truce. Sustained stability is essential for restoring confidence and ensuring smooth trade flows,” said S. C. Ralhan, President of the Federation of Indian Export Organisations (FIEO).
Perishable and high value exports to the GCC region are going through air cargo where rates have increased to Rs 800 a kg from Rs 450-500. Heavier items from sectors like engineering and other bulk items are major sufferers.
“Engineering goods export has been severely hit by the ongoing Iran war, which began more than a month ago. Since the UAE and Saudi Arabia are among the key markets for engineering exports, we see shipments to these countries falling in March,” said Pankaj Chadha, chairman of the Engineering Export Promotion Council (EEPC).
Longer routes push up shipping costs to US and Europe
For Europe and the US—India’s biggest market—ships are avoiding Dubai’s transshipment ports and taking a longer route through the Cape of Good Hope. This has led to rates of 20 feet equivalent container to US going up to $ 4,500-5000 from $ 2000-3500 pre conflict, Basu said
To deal with the high freight, insurance and other logistics costs to West Asia the government announced the Resilience and Logistics Intervention for Export Facilitation (RELIEF) scheme, which will also reimburse up to 50% of charges paid by small and medium exporters. The exporters want relaxation of conditions in the scheme because the support is paid after shipment payments are received. “The support should be given earlier as payments for exports can take months,” Chadha said.