India-Pakistan Port Bans Trigger Delays, Rate Hikes and Capacity Crunch

Yahoo

09-05-2025

Supply chain delays out of India and Pakistan are expected to hit ocean carriers as both countries closed off port access to each other.
India's restrictions are more nuanced than Pakistan's, which are a blanket prohibition of the import and transit of Indian goods. A May 2 decree banned vessels which have cargo from Pakistan onboard, including empty containers, from calling at Indian ports.
More from Sourcing Journal
Vietnam-to-US Exports, Freight Rates Soar on Tariff Drama
'Game-Changing' India-U.K. Free Trade Agreement Finally a Done Deal
India-Pakistan Trade Standoff Escalates Amid Kashmir Attack Fallout
Vessels carrying Pakistan-originated cargo that departed before the restriction are not permitted to berth at Indian ports until such cargo is discharged elsewhere.
The ban is expected to cause delays and could leave some cargo to be turned away from Indian ports like Mumbai, Mundra and Nhava Sheva.
Complicating matters, the restrictions in place will make it 'nearly impossible' for carrier services to make direct vessel calls to Pakistan's Port of Karachi or Port Qasim after stopping at Indian ports, according to freight forwarder OEC Group.
A report from India Shipping News indicated that a Hapag-Lloyd container ship, the Nagoya Express, called at Port Qasim on May 1 and was due at Nhava Sheva on May 3. But the vessel instead ended up diverting south to the port of Colombo, Sri Lanka, likely to transship the Pakistani cargo to the U.S. East Coast.
That report also said that the CMA CGM Bianca vessel en route to Mundra turned back on May 1 to Pakistan to offload cargo it previously picked up in the country.
Erik Rosica, account executive at OEC Group, said Thursday that ocean carriers will have to reroute vessels or create new sailings as the restrictions linger.
'It's going to create another space issue,' Rosica told Sourcing Journal. 'It's going to be difficult getting vessel space, because there's probably going to be such a demand and a shortfall of space now that they're splitting the surfaces essentially.'
Rosica said that most importers will be affected in a similar capacity regardless of which country they are picking up cargo from, but he noted that customers who need their goods quicker like those in high fashion, will suffer due to the adjustment period involved.
Along with the delays the capacity problems would cause, as well as potential port congestion in hubs like Singapore or Colombo, shippers would likely have to deal with rising freight rates out of the south Asian neighbors.
'We've already seen rates on the rise from India in the last month or so,' said Rosica. 'There have been a regular increase over the past six weeks, so this will only exacerbate that situation. Unfortunately, customers now they have the tariffs to worry about, plus now the ocean rate will start coming up from that region.'
Rates are bound to jump another way. The conflict has now resulted in CMA CGM announcing an $800 per container emergency operational recovery surcharge for Pakistani containers headed to Europe, the Mediterranean, the U.S. and Africa. The same surcharge will be applied to cargo entering Pakistan from Asian countries.
A separate $300 per container surcharge is levied on containers headed to Pakistan from Europe, the Mediterranean, the U.S. and Africa, as well as those leaving Pakistan for Asia.
The extra charges are effective May 15 for most trade lanes and June 6 for U.S., Latin America and Australia cargo.
CMA CGM says the measure has become 'necessary,' as the ongoing geopolitical developments in the region, which have significantly impacted the liner's operations.
'The surcharge is essential to maintaining the continuity, safety, and reliability of our services during this period,' the company said in a customer advisory.
Other major container shipping companies haven't established surcharges yet, but that will likely
'Once one car gets the ball rolling, the others kind of follow suit. If it looks like it's going to stick,' said Rosica. 'It's the same way with general rate increases (GRIs). A lot of times, MSC, because they're the biggest ocean carrier, would be the first to set a precedent for what an increase might be. Then the others will usually fall in line. But I don't think they're going to be the only ones.'
Hostility between the south Asian countries escalated in the wake of the April 22 massacre of 26 tourists by Pakistani militants in the historically disputed Kashmir region.
The tensions have further reached a boiling point, with India and Pakistan trading missile strikes across Wednesday and Thursday.