Amid W Asia conflict, logistics costs to surge, fear exporters

New Delhi, October 2

The escalation of conflict in West Asia is expected to push already high logistics costs besides hurting trade in sectors such as oil, electronics and agri products, according to exporters.

They said insurance costs for exports to the countries directly involved in the war could also go up, which would impact Indian exporters’ working capital.

Think tank Global Trade Research Initiative (GTRI) stated the conflict was already hurting India’s trade with countries like Israel, Jordan and Lebanon.

The Federation of Indian Export Organisations (FIEO) said the Iran-Israel conflict had the potential to significantly impact world trade and the global economy in several ways.

Oil prices up by $4 per barrel

Iran is a key player in oil market. Any escalation could disrupt oil supplies, leading to higher prices, which would impact global economies, especially those reliant on oil imports. Oil prices have already moved up by USD 4 per barrel. —Ajay Sahai, Fieo DG

“Iran is a key player in the oil market. Any escalation in the conflict could disrupt oil supplies, leading to higher prices, which would impact global economies, especially those reliant on oil imports. Oil prices have already moved up by USD 4 per barrel,” FIEO DG Ajay Sahai said.

He said increased tensions could destabilise West Asia, affecting trade routes like the Strait of Hormuz, through which a significant portion of the world’s oil passes.

“Disruptions could lead to higher shipping costs and delays. Many global supply chains depend on the stability of West Asia. Conflict could disrupt transportation and logistics, affecting industries ranging from electronics to agriculture,” Sahai said.

Further, if the West would put sanctions or trade restrictions, it would further complicate the global trade dynamics, he said adding ‘overall, the conflict could lead to increased volatility in global markets’.

Hand Tool Association Chairman S C Ralhan said orders to these countries would be on hold and gradually it would become ‘very risky and difficult’ to do trade in this region.

“Exports to Israel dropped sharply by 63.5 per cent, Jordan saw a 38.5 per cent decline due to spillover effects, and Lebanon experienced a 6.8 per cent decrease,” GTRI Founder Ajay Srivastava said. — PTI