Engineering Exports EEPC Highlights Logistics Risks in US-Iran-Gulf War
1.
Growing Concern for Exporters:
The ongoing conflict involving the United States, Israel, and Iran
is creating serious uncertainty for the exporting community.
2.
Key Markets at Risk:
Saudi Arabia and the United Arab Emirates are major destinations
for engineering goods and serve as gateways to the wider WANA (West Asia and
North Africa) region.
3.
Threat to Strategic Trade Routes:
Experts warn that the Strait of Hormuz, which carries about 20% of
global oil supply, could face disruptions or blockage.
4.
Impact on Energy and Freight Costs:
Any disruption in Hormuz could:
o
Trigger a spike in global energy prices
o
Push up freight rates significantly
o
Increase marine insurance premiums
5.
Existing Pressures on Exporters:
Exporters are already grappling with:
o
U.S. tariff pressures
o
After-effects of the Russia–Ukraine war
o
Elevated global logistics costs
6.
Risk of Wider Regional Escalation:
Reports suggest the war could expand across West Asia and the broader Middle
East, increasing trade and shipping uncertainties.
7.
Competitiveness at Stake:
Rising logistics, insurance, and input costs threaten to:
o
Erode price competitiveness
o
Compress profit margins
o
Strain revenue growth
8.
Potential Sectoral Impact:
If the conflict prolongs, the engineering sector could face:
o
Shipment delays
o
Route diversions
o
Higher transaction costs
o
Demand uncertainty in key markets
Overall
Assessment:
The escalating West Asia conflict poses a
significant risk to engineering exports, particularly to Saudi Arabia and the
UAE. Prolonged instability could raise costs across the supply chain, disrupt
trade flows, and adversely affect profitability and competitiveness in global
markets.
The
ongoing war involving the US, Israel, and Iran is quite worrying for the
exporting community. As for engineering goods, Saudi Arabia and the UAE are
among our key markets. Moreover, they act as a gateway to our exports to the
WANA region. It seems the war is escalating, which could not only disrupt
engineering exports to this region but may also affect some of the trade
routes. As has been indicated by many experts in geopolitics, the Strait of
Hormuz, through which 20% of global oil flows, could be blocked. This will not
only lead to a spike in energy prices but also push up freight costs
significantly. We have already been reeling under tariff pressure from the US
and the after-effects of the Russia-Ukraine war. The latest development adds to
our concerns and may affect our exports badly.
The
reports over the last two days show that the war is widening and could
potentially cover the entire West Asia and the Middle East. In case the current
situation prolongs, it will have a huge negative impact on the engineering
sector. It threatens to erode our competitiveness as a result of logistics and
insurance costs going up. The overall situation seems very volatile. Trade
disruptions to this region, especially the UAE and Saudi Arabia, mean a
substantial impact on our shipments. All the factors combined are set to
increase input cost, thus putting further strain on our revenue and
profitability.