Since regional tensions began to escalate in late February, freight rates on the Far East-to-Persian Gulf route have trended upward for six consecutive weeks. Data from the Shanghai Shipping Exchange indicates that for the week of April 10, the rate for this route stood at $4,167 per TEU. This marked the first time—since the inception of the Shanghai Containerized Freight Index (SCFI) in 2009—that the Persian Gulf route rate had breached the $4,000 threshold, even surpassing the peak levels observed during the pandemic in 2021. Yet, just one day prior to the shift in regional dynamics, this figure stood at a mere $1,327. In the span of just a month and a half, rates surged by over 200%.
However, during the week of April 17, the freight rates on this route finally halted their relentless ascent, falling by $136 from the previous week to settle at $4,031—a weekly decline of 3.26%. Viewed solely through the lens of the index, this might appear to signal a cooling of the market. Yet, the reality is far more complex than the index suggests; industry media outlets report that certain shipping lines’ all-inclusive quotes for Middle East-bound shipments have already touched the $8,300 to $8,500 range—figures that, in any historical context, represent an absolute all-time high.
Beneath the volatility of these freight figures lies the truly critical issue: shipping lines remain hesitant to re-enter the region. Immediately following the announcement of a ceasefire agreement on April 8, Maersk issued a statement acknowledging that while the truce might create opportunities for transit, it had not yet established a complete sense of maritime security certainty. The reaction of the insurance market offers an even more telling indicator. According to confirmations from Lloyd’s of London and related institutions, war risk insurance premiums for vessels transiting the Strait of Hormuz have skyrocketed from pre-conflict levels of 0.2%–0.3% to a range of 1%–3%, with rates for certain high-risk routes climbing even higher. This implies that for a single transit through the Strait, the insurance premium for a container ship valued at $150 million could amount to a staggering $375,000 to $450,000. Consequently, before resuming sailings, shipowners must await authoritative directives from maritime security channels, flag states, and insurance underwriters.
This cautious stance adopted by shipping lines is triggering a chain reaction—the most pronounced manifestation of which is currently unfolding at the southern tip of India. Vizhinjam International Seaport—a new facility operational for just over a year—has experienced severe congestion since mid-April. Local Member of Parliament Tharoor confirmed via social media that the port handled 61 vessels in March alone, setting a new monthly record since the start of its operations. Currently, approximately 100 vessels are queued up, awaiting a berth. Why has this port suddenly surged in popularity? The answer is simple: it boasts a natural draft of nearly 20 meters, lies just 10 nautical miles from the main east-west international shipping lanes, and is capable of accommodating ultra-large container vessels with a capacity of up to 24,000 TEUs. This offers a detour saving of over 500 nautical miles compared to the established ports along India’s west coast. Consequently, vessels originally bound for the Persian Gulf—unable to enter the strait due to current conditions—are now offloading and transshipping their cargo at this location.
Operational data further corroborates this surge in activity. Since commencing operations, the port has cumulatively handled 740 vessels and 1.57 million TEUs, consistently operating at a load exceeding 130% of its designed capacity. The second phase of expansion is not scheduled for completion until 2028, implying that the current congestion is unlikely to ease in the short term. For freight forwarders, the impact of this congestion is immediate and direct. With nearly a hundred vessels queuing up, waiting times are bound to be substantial. If your cargo is temporarily diverted by a shipping line to this port for transshipment, you must proactively seek clarification on three critical points: the expected waiting time, the status of the onward vessel connection, and who will bear the burden of any additional costs.
Meanwhile, insurance costs have yet to show any signs of abatement. As long as war risk insurance premiums remain elevated, shipping lines face additional costs amounting to hundreds of thousands of dollars for every voyage into the Persian Gulf—costs that will ultimately be passed on to freight rates. When quoting prices to clients, it is advisable to build in a sufficient margin for a “geopolitical risk premium”—the logic behind pricing strategies today differs entirely from that of just six months ago.
The Vizhinjam Port is operated by the Adani Group. This facility is quietly reshaping the landscape of the transshipment market across South Asia. It is situated merely a few hundred nautical miles from Colombo—a port that has historically served as the primary transshipment hub for cargo bound for or originating from India. If Vizhinjam’s cargo handling capacity continues to keep pace, the substantial transshipment fees India currently pays to foreign ports each year could gradually begin to flow back domestically. However, for freight forwarders, this shift implies—at least in the short term—both a wider array of options and the need for more complex route planning. Logistics strategies for cargo bound for the Middle East are evolving from a singular “direct sea route” model into a hybrid approach combining “sea-land intermodal transport” with “multi-node transshipment.” With Vizhinjam, Colombo, and the Fujairah land bridge now serving as viable alternatives, the transit times and costs associated with each potential route must be thoroughly re-evaluated.
The current level of uncertainty in the shipping market far exceeds expectations. Even as the situation in the Strait of Hormuz remains unresolved, the queuing congestion at Indian ports has already begun to reveal signs of systemic strain. For freight forwarders and foreign trade enterprises alike, understanding the underlying logic behind this congestion is far more critical than simply fixating on freight rate indices.