The quick widening of war in West Asia has set the panic among exporters and logistics providers as fresh bookings and loading have been put on hold while ships on seas get stranded.
“The panic button has already been pressed. There are no freight carriers available to book the shipments, The ships that have not crossed the Red Sea area are stuck, trying to decide whether to move or not,” Chief Operating Officer (COO) of STEER Engineering Rajaraman DC said.
STEER exports machinery to the US, Europe and Japan and five to six of its shipments that were to leave the manufacturing facility on Thursday are still with the company. This is because before the actual attacks by Israel and US on Iran, the build up of tensions in the region had put shipping and logistics companies on guard.
Trade Routes in Turmoil
It could take up to a week for clarity to emerge on the availability of shipping capacity, new routes, insurance and freight rates, CEO and Director General of Federation of Indian Export Organisations Ajay Sahai said.
West Asia has major routes through which India’s exports to the biggest markets of US and Europe pass. The conflict will have an immediate impact on India’s exports to the US of $ 86.5 billion, Europe of $ 98.4 billion and West Asia of $ 58.8 billion. Taken together these regions account for 56% of India’s merchandise exports.
“Sustained instability in these critical trade corridors would warrant close monitoring and calibrated policy support to maintain competitiveness,” President of FIEO S C Ralhan said.
Another source of impact of the conflict will be on key imports – including crude oil. Other than high fuel prices, the disruption in routes can delay supplies. Around 46% of the crude oil imports are sourced from the region. Iraq accounts for 17.8%, Saudi Arabia 14.1%, UAE 11.3% and Kuwait 3.37%.
The earlier episode of attacks on shipping in the Red Sea routes that lasted from late 2023 till 2025 had led to higher freight rates and more transit time. Routes through the Red Sea had to be abandoned and ships moved through Cape of Good Hope on the tip of Africa, increasing travel times by 15-20 days between India and the West. Through shortest routes, the transit time to the US is 45 days and for Europe 30 days.
Dubai Bottleneck
Past disruption was limited to an area so the increase in freight was two to three fold, Rajaraman said. In some special cases the increase in freight was up to 8-fold. The wider conflict has a scope to push prices much higher than before.
The current flareup has seen missile attacks on ports and airports of Dubai, which is the main transit hub for India’s exports to Europe and the East Coast of the US. Big mother ships do not dock at Indian ports so export consignments are first moved to Dubai by smaller ships and aircraft before they are consolidated and sent to the US and Europe by bigger vessels.
“For moving goods to Dubai the ships have to cross the Strait of Hormuz where the shipping lane is just 3 km wide and Iran has already announced its closure. It will take at least a week for clarity to emerge. Risk premiums and freight rates will increase, maybe not immediately but if the uncertainty extends,” CEO and founder of Lexship Padmanabhan Babu said. Lexship provides crossborder logistics services.
Freight rates are usually adjusted at the start of the month by major shipping lines and on Monday new rates would be published, he said. At the start of 2026 the rates were contracting.