'Matter Of When, Not If': Exporters Brace For Higher Costs As Baltic Dry Index Up Over 40%

The Israel-Iran conflict is likely to push up shipping costs for Indian exporters and cause trade disruptions, though the magnitude of the impact will only unfold over the next few days.

Global shipping indices are seeing a spike in freight costs. The Baltic Dry Index, a globally tracked shipping cost benchmark, rose by over 42% to 1,975 by June 16 from about a month ago, according to Bloomberg.

Pankaj Chadha, chairperson of the Engineering Export Promotion Council of India, also said that freight rates as well as insurance costs would likely go up in July as container costs were largely locked in for the ongoing month.

While there has been no change in prices so far, shipping costs are likely to rise over the course of the next few days, according to Ajay Sahai, chief executive officer of the Federation of Indian Export Organisations.

While how much prices rise by will depend on whether Iran shuts off the Strait of Hormuz, there are also concerns regarding regular plying of ships and availability of containers, he explained.

Having to avoid the Red Sea is also likely to disrupt trading routes to Europe, Sahai cautioned.