Escalating Freight Costs and Operational Hardships Threatening MSME Exporters

Published

The ongoing U.S.-Iran-Israel war has caused a dramatic and prolonged increase in ocean freight costs, dealing a severe economic blow to India’s Micro, Small, and Medium-scale Enterprises (MSMEs) export sector. Geopolitical tensions in West Asia have left thousands of shipping containers physically stranded at regional ports, causing severe market shortages that have pushed freight rates up by as much as 200% to 1,000% depending on the destination. For instance, the cost of moving a 20 TEU container from South Indian ports to Jebel Ali has skyrocketed from a pre-conflict rate of $300–$400 up to an astronomical $5,700, while shipment transit periods have simultaneously stretched by two additional weeks. This crushing logistics inflation is paired with an aggressive 30% surge in raw material inputs like steel, alongside doubled prices for copper and brass, leaving thin-margin MSMEs entirely incapable of absorbing the overheads. Furthermore, perishable goods exporters are suffering heavy losses due to extended waiting times for available containers, while global buyers, already grappling with domestic inflation, refuse to share the financial burden. Despite frantic appeals made by industry representatives to the Union government, no state regulatory relief has materialized, forcing vulnerable MSMEs to bear the massive financial losses alone in a climate reminiscent of the COVID-19 supply chain crisis.

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