Mid-day test drive: Rising costs and shipment delays —West Asia conflict hits Mumbai’s businesses

The escalation in West Asia has resulted in a worldwide crisis and Indiarsquos financial hub has also felt the impact of the conflict Hundreds of labourers employed as loaders in south Mumbai have been witnessing a drop in their workloads In this test drive midday spoke to multiple stakeholders engaged in the importexport field to understand the impact of the West Asia conflict on the cityrsquos tradersIndustry players say that with the shipping routes hit in the Gulf region customer demand is declining thereby impacting the entire inner circle of the business chainFreight costs surge shipments stallThe disruption of key maritime routes including the Strait of Hormuz and the partial shutdowns of the Gulf terminals have severely impacted global shipping Shipments are now being rerouted through longer multileg journeys significantly increasing both time and costldquoI shipped goods to Saudi before the war but still had to pay war surcharges What normally costs USD 800 is now costing nearly USD 5000rdquo said Amir an imitation jewellery exporterldquoAt a time of low demand and high risk sustaining oneself is heroicrdquo he saidAir cargo has also taken a hit Limited airline availability has worsened delays and inflated ratesldquoMy customer in Dakar has been waiting over 10 days but the freight is stuckrdquo another exporter Surendra said ldquoOnly select airlines like Lufthansa are accepting cargo to East Africa and rates have jumped from Rs 450 per kg to Rs 1300 with no reliability and frequent cancellationsrdquoFor many exporting no longer makes financial sense ldquoCosts are skyrocketing and customers are unwilling to pay morerdquo said a steel exporterManufacturing takes a hitThe disruption in logistics has directly translated into a breakdown of supply chains Industries that rely heavily on imports especially from West Asia are facing acute shortagesldquoEarlier materials came directly from China Now they arrive through multiple routes with delaysrdquo said Aksh a steel manufacturer ldquoWar surcharges are added at every stage so costs keep risingrdquoThe steel industry is among the worst affected given its reliance on imports from the Gulf Around 70ndash80 per cent of limestone is imported from the UAE and Oman while nearly 59 per cent of Direct Reduced Iron DRI comes from the region Industrial gases such as LPG LNG and propane critical for welding and molding are also in short supply With input constrained some factories have cut production by as much as 50 percentManufacturers now face a paradox rising input costs combined with falling export viability are forcing production to haltThe domino effect Demand costs and cash flowThe crisis is not just about supply it is equally about demand destruction and financial stressGoods worth crores of rupees are stuck in transit and payment cycles have become uncertainExporters are hesitant to ship due to high costs buyers resist price hikes and payments are delayed amid logistical risks Currency fluctuations particularly a rising dollar add further strainldquoWe are facing shipping delays pending payments and a rising dollarrdquo said Burad a businessman with over three decades of experienceSmall and medium enterprises MSMEs are among the hardest hit lacking the financial cushion to absorb prolonged disruptionsA single disrupted shipment can wipe out months of profit Jewellery exporters report consignments worth lakhs being returned undelivered ldquoCargo sent to the UAE was returned to JNPTrdquo one exporter saidInsurance has become another bottleneck with companies increasingly reluctant to cover shipments to highrisk regionsGround zero Labourers face crisis againWhile businesses struggle the most severe impact is felt at the bottom of the economic pyramid Daily wage labourers who form the backbone of the supply chain are facing a crisis reminiscent of the Covid19 lockdownWith factories scaling down and logistics slowing work opportunities have dwindled sharply ldquoWe used to earn Rs 700ndash Rs 800 a day but now itrsquos barely Rs 100ndash200rdquo said Jagdish Kanojia who leads a group of loaders ldquoIt feels like the Covid period againrdquoFuel shortages coupled with rising prices have worsened living conditionsldquoThere is no LPG available itrsquos being sold in blackrdquo said a factory worker ldquoKerosene has gone up from Rs 110 to Rs 150 and even my regular eatery is shut hence I am returning to my villagerdquo he addedLike the factory worker quoted above many others are now returning to their villages as survival in the city is becoming increasingly difficultldquoMy roommate left because there is no gas for welding workrdquo another worker saidldquoI have three daughters and I am the only breadwinnerrdquo said Ibrahim a hawker ldquoWhere should the poor gordquoThe ancillary sectors are also under strain Packaging costs especially plastics have surged sharplyldquoWe used to buy plastic at Rs 1100 now itrsquos above Rs 2200rdquo said Mohammed Ali who packages cargo for shipments ldquoBusinessmen wonrsquot pay more but our costs have doubled and workers are leavingrdquoIconic restaurant chains such as Bhagat Tarachand in Kalbadevi small eateries and several other establishments in the area are also strugglingMany have either shut down shifted to coal and electrical appliances or reduced operations due to LPG shortages further impacting workers who depend on them for affordable mealsPockets of opportunity amid crisisInterestingly not all sectors are losing Certain industries such as plastics brass and select metals may benefit from rising global prices and tightened supplyA few traders are holding inventory anticipating better margins However most believe the situation depends on how long the conflict lastsldquoA prolonged war could lead to bigger gas disruptions higher input costs and inflationrdquo said Burad ldquoDomestic demand may hold but exports will lagrdquoStill some remain cautiously optimistic ldquoThis is a shortterm disruption a midterm opportunity and a longterm test of reliabilityrdquo said Pravin Wasan who runs a shipping company ldquoThose who manage logistics well will emerge strongerrdquoFor now the focus across Mumbairsquos trade ecosystem has shifted from growth to survivalThe conflict serves as a stark reminder in a globalised world no economy is isolated and the deepest impacts are often felt by those least equipped to bear them