West Asia Conflict Doubles Freight Costs for Indian Exporters as Container Rates Jump 40% and Emergency Surcharges Reach $4,000 Per Container

The ongoing US-Israeli war with Iran and associated disruptions across key maritime corridors in West Asia have significantly elevated freight costs for Indian exporters, with container shipping rates jumping as much as 40% and emergency surcharges reaching $2,000 to $4,000 per container since the conflict began in late February 2026. Air freight rates from Chennai to the US and Europe have doubled, while rates from Delhi have surged nearly four times, according to industry sources. 

War Risk Surcharges (WRS) imposed by major shipping lines have added further pressure, ranging from $500 to $4,000 per container for cargo moving to and from the Upper Gulf, Arabian Gulf, and Persian Gulf. Hapag-Lloyd introduced a WRS of $1,500 per TEU for standard containers and $3,500 per container for reefers and special equipment. CMA CGM Logistics implemented an Emergency Conflict Surcharge (ECS) from 2 March 2026 for cargo moving to certain Middle East and Red Sea destinations. These surcharges, combined with the near doubling of freight and fuel costs and extended delivery times, are severely squeezing exporter profits and disrupting supply chains across textiles, pharmaceuticals, auto components, and agriculture.

India's February 2026 trade figures highlighted the immediate impact of these disruptions: merchandise exports fell slightly by 0.81% year on year to USD 36.61 billion, while imports surged by 24.11% to USD 63.71 billion, driven primarily by higher gold and silver purchases and elevated oil import costs. An estimated 40,000 to 45,000 Indian export containers were stuck at sea or in foreign ports due to shipping diversions.

In response, the Indian government launched the Rs 497 crore RELIEF scheme (Resilience & Logistics Intervention for Export Facilitation), which provides automatic extensions for export obligations and aims to cover extra freight and insurance expenses, particularly for small and medium-sized enterprises. The government also restored the rates and value caps under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme with effect from 23 March 2026 to provide further relief to Indian exporters facing elevated logistics costs.