News / India-Pakistan 'tit-for-tat' cargo ban sparks sudden supply chain shocks

4 © Andrea Nicolini

India and Pakistan have banned each other’s cargo from transiting their ocean gateways, following the 22 April attack on tourists in Kashmir.

“Direct or indirect Import or transit of all goods originating in or exported from Pakistan … shall be prohibited with immediate effect,,” India’s Directorate General of Foreign Trade (DGFT) said on Friday.

“This restriction is imposed in the interest of national security and public policy,” DFGT added.

Pakistan’s Ministry of Commerce immediately retaliated with a similar directive, but said  consignments already holding bills of lading or letters of creditwould be allowed to continue.

Ocean carriers serving trades out of the subcontinent were caught offguard by the disruption, sparking contractual concerns.

The move left carriers with little choice but to avoid calling at ports like Karachi and Port Qasim on westbound sailings, mostly for trades to the US and Europe, and search for alternatives to connect Pakistan trade.

Two-way trade between India and Pakistan is historically negligible, but third-country freight remaining in Indian networks became a victim of the diplomatic face-off, despite there being no restrictions from either side on foreign-flagged vessels plying their respective territorial waters.

Indeed, carrier sources in India have generally tried to downplay any potential operational pressure due to the new restrictions.

“Some service disruptions may be caused initially, but we appreciate the steps taken by the Indian government under the circumstances and carriers will do all they can to assist [the trade],” one Mumbai-based industry representative told The Loadstar.

However, some sailings out of Pakistan for India have been diverted to Sri Lanka’s Colombo port to drop off Pakistan boxes, according to industry sources.

Maersk said it was making every effort to fix supply chain gaps the disruption might cause for customers adding: “We have established dedicated response teams to assess the full impact of these developments and provide tailored guidance to customers whose supply chains are affected.”

Given that a near-term restoration of normal trade ties between India and Pakistan seems unlikely, it remains to be seen if carriers serving Indian trades will reorganise their network rotations to include additional calls at Colombo or Jebel Ali.

One source at a major carrier offering direct calls at Port Quasim for US east coast trades, however, ruled out any immediate schedule changes.

While regional transhipment options could help remediate the pain, the latest disruption is not good news for supply chain stakeholders and cargo owners already having to navigate the lingering Red Sea-linked challenges.

And the crisis has hit the air sector too: major airlines are avoiding flying over Pakistan owing to the tension with India.

Air France and Lufthansa have both said they would avoid Pakistan airspace, while other major carriers also appear to be diverting. Both India and Pakistan have closed their airspace to carriers from each other, leading to higher costs and lengthier flights.

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