Impact of West Asia War on Maritime Sector

Stranded Vessels and Supply Shortages

• The ongoing West Asia conflict has stranded merchant vessels near the Strait of Hormuz, causing acute shortages of fresh water and food.
• India’s Directorate General (DG) of Shipping has urged ship managers to arrange urgent replenishments.

Naval Escorts and Safety Measures

• The government is coordinating naval escorts for 22 vessels in the Strait to ensure safe departure.
• All Indian seafarers are reported safe, with close monitoring by DG Shipping and associated agencies.

Economic Impact and Logistics Disruptions

Shipping traffic through the Strait of Hormuz, crucial for global oil and LNG, has drastically reduced due to increased insurance costs and regional threats.

• Freight and insurance rates have surged, leading to a potential pan-Asian container shortage.
• Estimated logistics costs for Indian exports to Europe have increased by $800-1,500 per container.

Security Risks and Insurance Premiums

• War-risk insurance premiums for vessels in the region have sharply escalated, adding $0.5-1 million per voyage for VLCC tankers.
• Indian shipping companies face increased costs and reduced fleet capacity by up to 15% due to rerouting.

Cargo and Port Operations

• Stranded vessels carry approximately 215,000 metric tons of LNG, 321,288 metric tons of LPG, and 1.68 million metric tons of crude oil.
• Indian ports are experiencing increased dwell times and potential vessel bunching.

Macroeconomic Projections

• A prolonged conflict may result in an additional annual import bill of Rs 30,000-50,000 crore for India.
• This could widen the trade deficit by up to $10 billion and impact the Wholesale Price Index.

The DG Shipping’s assessments indicate potential severe energy shocks for India if the conflict escalates.