Hormuz crisis raises costs for Indian exporter, delays shipments to Africa

A shipment from India to Cameroon that once took 37 days is now taking 95 days, while raw material and packaging costs have risen by as much as 30 per cent at nutrition products exporter Nuflower, as the Strait of Hormuz crisis disrupts shipping routes and raises costs for Indian exporters.

Akshat Khandelwal, founder and CEO of Nuflower, told Firstpost that prices of key inputs such as peanuts, milk and oil remain significantly higher than their January 2026 levels, even after some correction from recent peaks.

“The increase in major raw material prices remains the single biggest additional absolute cost our company is facing right now,” Khandelwal said.

He said higher crude oil and gas costs, combined with a sharp increase in freight rates, have worsened the company’s procurement economics and extended lead times. Almost all of its shipments have faced delays over the past four to five months, he added.

Freight rates surge

Nuflower has seen steep increases in freight costs across several routes.

Khandelwal said freight rates to Sierra Leone have risen 115 per cent over the past three to four months. Rates for Ashdod in Israel increased 68.75 per cent between March and May, while freight costs to Guatemala jumped 151.16 per cent between March and August.

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Shipping lines are also imposing additional freight surcharges because of higher fuel costs.

The increases reflect wider disruption in global shipping as carriers reroute vessels to avoid conflict zones, skip scheduled port calls and adjust sailing schedules.

The International Monetary Fund has estimated that around 25-30 per cent of global oil and about 20 per cent of liquefied natural gas normally pass through the Strait of Hormuz, making the waterway critical to global energy supplies.

Reuters reported on Wednesday that only eight vessels were tracked through the Strait of Hormuz on Tuesday, compared with a 10-day average of about 12. Before the disruption, the waterway typically handled around 130-140 vessels a day.

Africa routes hit hardest

For Nuflower, African destinations have been among the worst affected.

The company said shipments from Mundra to Cameroon that normally take about 37 days are now taking around 95 days. Similarly, shipments from Mundra to Durban have stretched from about 27 days to more than 90 days.

The delays are being driven by vessel backlogs at both origin and destination ports, a shortage of berths and congestion at transshipment hubs.

Nuflower said cargo can spend prolonged periods waiting at hubs such as Lomé and Pointe-Noire for connecting feeder vessels.

Khandelwal said shipping lines are also increasingly skipping scheduled port calls, a practice known as blank sailings, and rerouting vessels to avoid conflict zones. This has created bottlenecks at intermediate hubs and resulted in cargo being rolled over to later sailings.

The disruption has added both time and cost to routes that were previously relatively predictable.

Exporters absorb higher costs

Khandelwal said the company cannot fully pass higher costs on to customers under such contracts and is therefore absorbing a significant portion of the increase, putting pressure on margins.

In some cases, customers have secured approvals to share the additional freight costs.

Nuflower has also attempted to increase export prices wherever its contracts allow. But Khandelwal said the company has limited room to raise prices because it operates in a highly cost-competitive segment and its products are designed to support malnourished children.

“It’s a very delicate balance for us,” he said, noting that substantially higher prices could reduce the company’s ability to reach vulnerable populations.

Overseas buyers feel the squeeze

The disruption is also affecting Nuflower’s overseas customers.

The company said some buyers in Europe and Africa have been forced to reassess their procurement as the cost of producing and shipping goods from India has risen sharply.

In some cases, buyers have started sourcing from other countries despite those alternatives traditionally being more expensive.

The shift reflects the importance of delivery reliability alongside price. Longer transit times and higher logistics costs can make Indian supplies less competitive even when the underlying product is cheaper.

Nuflower also pointed to the disruption of traditional trade corridors. Bandar Abbas, for instance, was previously an important transit point for shipments into Afghanistan, but the route has now been severely compromised.

Government support

The Indian government has already introduced measures to help exporters deal with the disruption.

In March, it launched the RELIEF (Resilience & Logistics Intervention for Export Facilitation) scheme under the Export Promotion Mission with an outlay of Rs 497 crore. The programme seeks to address extraordinary increases in freight and insurance costs and war-related export risks arising from disruptions in the Gulf and wider West Asia maritime corridor.

The measures include enhanced Export Credit Guarantee Corporation risk coverage, support for eligible MSME exporters facing higher freight and insurance costs, and assistance for stranded cargo.

The government has also expanded the list of destinations covered under RELIEF to include Egypt and Jordan.

The Commerce Ministry has said an inter-ministerial group is monitoring the crisis, including its impact on shipping routes, freight rates, insurance availability, customs clearances and cargo movement.

For exporters, however, the cost burden extends beyond freight rates.

Nuflower is seeking support to reduce demurrage and detention charges when containers are held up because of vessel cancellations, sudden schedule changes or port congestion. It is also seeking broader insurance support or regulatory measures to contain sharply higher premiums.

Cash flow emerges as a key risk

If the disruption persists, Nuflower sees a growing risk to its cash flow.

Khandelwal said delayed shipments can lead to delayed payments, putting pressure on working capital. If that pressure continues, it could eventually disrupt the company’s production cycle.

The company is not currently planning to shift production or fundamentally change its export routes. Instead, it is working with several freight partners to find the most competitive logistics options and reduce turnaround times.

But the longer the disruption lasts, the harder it could become to contain the impact.

For Nuflower, the consequences also extend beyond costs and margins. The company supplies nutrition products intended for malnourished children, meaning prolonged shipping delays can affect last-mile distribution and the timely delivery of products.

The experience highlights a broader challenge for Indian exporters: even if production costs remain manageable, prolonged shipping disruptions can erode competitiveness through higher freight, insurance and financing costs while making delivery timelines increasingly uncertain.