The recent Iran-Israel tensions have caused concern for Indian exporters as freight costs are expected to rise again. The capture of the MSC Aries by Iranian forces has heightened supply chain concerns for the industry. This 14,000-teu vessel was part of MSC’s India-Europe service and its capture may lead to increased cargo insurance premiums and carrier surcharges.
In response to rising airline rates and flight schedule disruptions, Indian air cargo shippers are seeking alternative logistics routes. Shipment backlogs and airspace restrictions over Iran have further complicated air freight logistics, leading to longer lead times and increased costs. Security measures at airports and cargo complexes have also impacted logistics services, particularly for exports to Europe.
While some ocean carriers on India-Middle East trades have announced rate increases to meet improving demand, India’s export industry had a respectable performance in the last fiscal year. Despite challenges in the supply chain, trade volumes by value were only marginally lower compared to the previous year. Ashwani Kumar, president of the Federation of Indian Export Organisations, believes the resilient trade performance reflects a positive market outlook amid strong economic growth expectations.
In an effort to boost exports in the future, New Delhi is focusing on local manufacturing, with expectations of a Tesla production plant in India. Despite these challenges and uncertainties in the global market, there is optimism for continued growth in the export industry.
