Despite the ceasefire announced between the US and Iran and the partial easing of tensions following the reopening of the Strait of Hormuz, Indian freight and logistics companies see little immediate relief in freight rates.
Industry representatives are scheduled to meet officials from the Ministry of Ports, Shipping and Waterways this week to gain a better understanding of the evolving situation and discuss alternative shipping routes that could help reduce cargo transportation costs, a person aware of the matter said.
"Freight rates are unlikely to soften immediately. Any meaningful reduction will depend on the sustainability of the ceasefire and the pace at which airlines restore normal schedules and add capacity," said Vipin Vohra, Chairman of Continental Carriers Group of Companies and a Managing Committee member of PHDCCI.
However, Vohra noted that the ceasefire has already improved supply chain predictability, boosting confidence among airlines, shippers and freight forwarders, with pricing relief expected to follow as market conditions gradually normalise.
According to industry executives, it could take several weeks for both air and sea cargo routes to return to normal operations, while freight rates may remain elevated for at least a couple of months.
"Everything will depend on how quickly ships are able to navigate through the Strait of Hormuz and reach destinations such as India and China. Another important factor is how soon production facilities affected by the conflict resume normal operations," said Vijay Kumar, CEO of the Express Industry Council of India (EICI).
Industry players said shipping lines, insurers and vessel operators are likely to wait for sustained geopolitical stability, safe passage through key shipping lanes, progress in mine-clearance operations and greater clarity on war-risk premiums, tolls and other surcharges before rolling back emergency charges or lowering freight rates.
"Meaningful freight cost relief may take around six to eight weeks, provided the ceasefire holds, the Strait of Hormuz remains safely navigable and direct sailings resume to key transshipment hubs such as Jebel Ali. Full normalisation could take three to five months as cargo backlogs, port congestion, vessel schedule disruptions, transshipment delays, feeder-network constraints and container imbalances will take time to clear," said Krishnakumar Nair, Founder and CMD of Kenshine Group.
Industry executives added that any relief in freight costs is likely to be reflected first in fresh bookings and new invoices, while cargo already in transit under contingency pricing is expected to continue bearing the higher transportation costs.