The “Reliability Tax”: Freight and Insurance Premiums Spike Across Indian Ocean

Logistics experts are warning of a new “Reliability Tax” hitting the Sri Lankan export sector. Following the escalation of naval conflicts in the Middle East, global insurance underwriters have significantly raised war-risk premiums for vessels calling at South Asian ports. Freight rates for the Colombo-Europe and Colombo-US lanes have seen a sharp increase as shipping lines impose “Emergency Risk Surcharges” to cover the costs of longer transit times around the Cape of Good Hope.

For Sri Lankan apparel and tea exporters, this means margins are being squeezed by both time and cost. The “Just-in-Time” delivery model is being replaced by a “Just-in-Case” strategy, leading to a massive spike in the demand for temporary bonded warehousing. Logistics providers are now facing the challenge of managing “packed but unshippable” inventory as shipping schedules become increasingly erratic.

Source: Daily News – How the Iran conflict is reshaping shipping and exposing Sri Lanka’s freight vulnerabilities