Iran–israel war could shut bandar abbas port push up air freight rates exporters tell govt

Iran–israel war could shut bandar abbas port push up air freight rates exporters tell govt

Indian exporters on Friday urged the government to plan alternate shipping routes to West Asia, warning that the escalating Iran–Israel war could lead to the closure of Iran’s largest port, Bandar Abbas, and drive up air freight charges as several West Asian countries are closing their airspace, a person aware of the development said.

“There are concerns that the Bandar Abbas port could be closed, so alternate routes—particularly Chabahar Port—should be considered. There is also worry over a surge in air freight, along with ocean freight, due to airspace closures in several West Asian countries such as Jordan and Iran. Pakistani airspace is already closed,” exporters told the government at a stock taking meeting on Friday at the Commerce and Industry Ministry.

“Sea freight could rise, and the war risk premium may further add to costs. Oil flows remain steady through the Strait of Hormuz, but the situation is volatile,” traders said.

A Commerce Ministry official said traders informed the government that the situation in the Strait of Hormuz is “currently stable”, and a ship reporting system has been put in place to monitor any incidents. “The freight and insurance rates are also being closely monitored,” the official added.

The Indian Express had earlier reported that escalating tensions between Iran and Israel have further driven up marine cargo insurance premiums, amid growing war-related risks and the potential threat to global shipping and trade routes.

Marine cargo insurance premiums have now risen by 15 per cent to 30 per cent, with insurers charging an additional 0.15 per cent of the cargo’s value, insurance sources said. The increase is expected to impact commodity importers and exporters operating from ports in Gujarat and Maharashtra.

Exporters said that Red Sea exposure premiums began climbing after the Russia–Ukraine war, well before the current Iran–Israel conflict. That earlier escalation had already prompted global underwriters to reassess maritime risks. The latest flare-up has only deepened concerns—especially in the Red Sea, a crucial corridor for global oil and cargo trade.