UNCTAD report highlights freight volatility as “the new normal” for South Asia’s maritime trade
Red Sea crisis and tariff battles pushed container rates to near-pandemic highs in 2024
Climate-linked port disruptions and rerouting inflated costs and emissions
Decarbonisation rules create both opportunities for India and Bangladesh and risks for smaller carriers
Geopolitical tensions and supply chain shifts could redraw global shipping routes through the region
South Asia’s maritime sector, led by India, is navigating turbulent waters as volatile freight rates, climate-related disruptions, costly decarbonisation rules and shifting geopolitics converge, according to a new United Nations report.
The UN Trade and Development’s (UNCTAD) 2025 Review of Maritime Transport warns that while trade flows through the Indian Ocean have so far remained resilient, the region’s shipping future depends on its ability to adapt to a rapidly changing global order.
The Red Sea crisis of 2024, compounded by tariff battles this year, drove spot container freight rates to levels unseen since the pandemic, the report pointed out. By mid-2024, the Shanghai Containerised Freight Index had peaked at 3,600 points, 93 per cent higher than a year earlier, before easing but remaining elevated.
Detours around the Cape of Good Hope lengthened voyages by 17 per cent in 2024, squeezing vessel availability and pushing up costs. “Freight volatility is becoming the new normal,” the report noted, with South Asia particularly exposed because of its reliance on food and fuel imports.
For India, high rates have hurt exporters but also boosted its role as a transhipment hub, revealing both vulnerability and opportunity.
Extreme weather has compounded disruption. Port closures in Asia and the Caribbean during 2024 slowed vessel turnaround and added congestion, further lifting rates, the report underlined. Longer routes from both climate and geopolitical blockages increased global shipping distances by nearly 6 per cent, inflating emissions alongside costs.
South Asia’s climate-vulnerable coastlines face mounting risks from storm surges and flooding, making port modernisation more urgent, UNCTAD pointed out.
Decarbonisation measures are reshaping shipping economics too. Emissions pricing and new IMO rules could raise fuel costs by up to 80 per cent. For India and Bangladesh, ship recycling industries could benefit as the Hong Kong Convention comes into force, but Pakistan lags behind. Smaller carriers in Sri Lanka, Bangladesh and Pakistan remain exposed, lacking access to green finance, the report said.
Geopolitics remains the wild card. In June 2025, the Israel-Iran conflict pushed spot rates to port city Jebel Ali up by 55 per cent in a single month. Any prolonged disruption in the Strait of Hormuz could reroute cargo via South Asia, straining Indian and Sri Lankan ports.
Meanwhile, tariff swings between the US and China have unsettled trans-Pacific flows, rippling into South Asian trade. “Sudden trade policy shifts are disrupting the balance between supply and demand, fuelling rate volatility,” UNCTAD cautioned.
Yet India is emerging as a strategic beneficiary of supply chain diversification, with companies shifting manufacturing away from China. Trade between East Asia and the subcontinent rose n 5.7 per cent in 2024, UNCTAD said.
The report flags three key vulnerabilities: Reliance on food and fuel imports, congested ports in India and Bangladesh and risks of overcapacity as global fleet growth outpaces demand. Global fleet capacity has grown 85 per cent since 2010, the report said, far outpacing demand growth, raising fears of price crashes if demand weakens.
To cushion shocks, UNCTAD calls for building capacity for stronger freight monitoring, evidence-based policymaking to protect essential imports and multilateral coordination across UN bodies like UNCTAD, International Maritime Organization, World Trade Organization and Food and Agriculture Organization for policy coherence.
Coal and LPG imports to India surged in 2024, underscoring its central role in global energy flows. Whether the region can turn volatility into resilience will depend on upgrading ports, greening fleets and leveraging its recycling base into higher-value shipbuilding.