Indian exporters are in a wait-and-watch mode as they expect air freight volume to Europe to rise 10-15%, logistics and insurance costs to increase and engineering export demand to Europe to be impacted following Iran’s attack on Israel. Already, the unfolding crisis in the Red Sea region is leading to the shifting of large amounts of cargo traffic to air mode, such as leather goods, which were traditionally sent by ships, pushing up air freight volume. This has led to a surge in air cargo cost to Europe. Besides, flying time is expected to increase because one can’t fly over Iran.
There is a worry that the Iran-Israel conflict could disrupt the global supply chain, the aviation and shipping industries, sparking concerns over air travel safety and maritime security worldwide,
causing a potential rise in airfares and increased war-risk premiums for vessels. Agricultural trade could be impacted if the conflict escalates as Iran is one of the largest consumers of basmati rice from India. Also, war risk premiums of ships going through the region will shoot up. Six months ago it used to be $10,000 WRP for a Supramax vessel, now it is $35,000, as per a report.
Source: Exim News Service: New Delhi, April 15