Carriers Impose $4,000/FEU Surcharge in the Middle East: Indian Exporters Appeal to Government for Help

Mundra Port, India (Photo: Adani Ports and Logistics)

Escalating geopolitical tensions following the US and Israeli attacks on Iran starting February 28 are striking a severe blow to the global supply chain. According to reports from exporters, shipping lines are currently demanding an emergency contingency surcharge of up to $4,000 per 40-foot equivalent unit (FEU) carrying perishable goods.

More concerningly, carriers are refusing to release cargo, even for shipments that had already arrived at destination ports before the conflict erupted.

Stranded Cargo and Regulatory Response

This abrupt demand is creating immense financial hardships for Indian exporters as they are forced to bear unexpected, out-of-pocket expenses.

Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), spoke out about this unreasonable situation: "Before the war started on February 28, the ships had reached the Middle East region ports, but they are not doing the delivery and are seeking high surcharges. We have raised the issue with the commerce ministry,"

Facing pressure from the business community, the Indian government quickly formed an inter-ministerial group to assess the impact of current geopolitical developments on the nation's export activities, particularly the severe disruptions in the supply chain.

The Unreasonable Surcharge Dilemma

Mr. Sahai argued that these surcharges should ideally only apply to cargo that had not yet been loaded onto vessels from India. However, the reality is entirely the opposite: "But they have put charges on all of them. This is creating a big problem. The delivery has not been done. Now the problem is, who will be able to absorb this cost?"

Exacerbating the anxiety of domestic exporters, shipping lines have now stopped accepting export bookings to West Asian countries.

Surging Freight Rates and the Risk of Container Shortages

The bottleneck doesn't stop at surcharges; it also triggers a chain of consequences regarding freight rates and equipment capacity. Sharad Kumar Saraf, a Mumbai-based exporter and founding chairman of Technocraft Industries India, shared his insights on the current market context: "Sea freight has gone up by about 50 per cent. Gradually, we are also facing a container shortage because ships are stranding mid-water,"

Mr. Saraf warned that carrier-related issues are mounting, which will undoubtedly hurt the price competitiveness of domestic goods in international markets. The fact that carriers are forced to reroute their voyages around the Cape of Good Hope is also leading to severe delays in delivering export shipments to buyers.

Pressure Spills Over to Air Freight

The maritime disruptions have immediately put pressure on air transport. According to Mr. Sahai, air freight rates have also begun to climb due to the conflict, further threatening the competitiveness of Indian goods.

On-the-ground reports show that some airlines operating routes from Calcutta to the Middle East have jacked up their rates from 175 Rupees/kg to up to 425 Rupees/kg. Assessing the upcoming overall picture, the FIEO Director General emphasized: "The impact of these disruptions on India's exports may be reflected in the March data."

With India's export turnover to West Asian economies reaching $58.8 billion in 2024-2025, any prolonged turmoil will leave deep scars on the country's trade balance.

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Source: Phaata.com (According to The Economic Times)

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