War risk, freight surge endanger trade outlook for Pakistan

2026-03-16 - 10:24

LAHORE – Mr. Atif Ikram Sheikh, President FPCCI, has stressed that escalating military tensions in the Middle East and the closure of the Strait of Hormuz have triggered alarm across Pakistan’s trade and industry landscape – with business leaders warning that soaring freight costs and delayed shipments could derail country’s economy. Mr. Atif Ikram Sheikh highlighted that following the outbreak of the Iran conflict in late February 2026, global shipping markets have been thrown into turmoil. With commercial vessel traffic through the strategic waterway grinding to a halt and shipping lines have imposed crippling war-risk surcharges – raising fears of a balance of payments crisis for Pakistan. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called for immediate government intervention to protect the nation’s trade and industrial sectors. FPCCI Chief explained that the geopolitical instability in the Gulf poses a threat to the country’s export competitiveness – with approximately 80 per cent of Pakistan’s crude oil imports and a quarter of our liquefied natural gas (LNG) transiting through the Strait of Hormuz – and, any prolonged disruption will inevitably bleed into our foreign exchange reserves and trigger severe inflationary pressures. Mr. Atif Ikram Sheikh highlighted that the financial toll on logistics has been immediate and staggering. Container freight rates on major routes have skyrocketed. Furthermore, shipping lines have introduced emergency war-risk surcharges ranging from $1,500 to $3,500 per standard container (TEU). President FPCCI has cautioned that these logistical bottlenecks could spell disaster for the nation’s premier export sectors as transit times to our key markets in the European Union and the United States are expected to increase by 15 to 20 days due to vessels rerouting. If these supply chain disruptions persist, the value-added textile sector alone could witness a 10 to 20 per cent drop in exports this month – and, we cannot afford to have our trade deficit widen under the current IMF program, he added. Mr. Atif Ikram Sheikh elaborated that the crisis is already reverberating through the domestic economy as transshipment rollovers and severe delays have been reported at Karachi’s port terminals because global shipping giants have suspended bookings from Pakistan for Gulf-bound cargo. Mr. Saquib Fayyaz Magoon, SVP FPCCI, said that compounding the crisis for local manufacturers is the recent Rs 55 per liter spike in domestic diesel prices – which has pushed inland transportation costs up by an estimated 15 to 25 per cent. Industry representatives argue that standard 30-day fixed inland freight contracts are no longer viable; leaving exporters highly-vulnerable to weekly fuel price shocks. The FPCCI leadership has urged the government to formulate an emergency contingency plan, including the exploration of B2B barter trade mechanisms with regional partners and securing alternative fuel supply chains – to insulate the domestic market from the worst of the global economic fallout.