Middle East War: Essential food commodities’ prices bound to rise as global shipping costs increase

• War risk premiums have risen as high as 1 percent of the value of a ship in the past 48 hours, from about 0.2 percent last week, which adds hundreds of thousands of dollars in costs for every shipment

By Huzefa Aliasger

Global shipping costs have started to rise following the Israel-US conflict in Iran as the Strait of Hormuz being closed by the Iranian authorities for passing ships containing all sorts of trade to Asia. Sri Lanka’s import and export sector will also bear the brunt of rising shipping costs as insurance for ships increase and route changes incur more delays, an official from the Essential Food Commodities Importers and Traders Association said.  
A spokesman for the Association told the Daily Mirror that “Shipping costs have already started to rise slightly as insurers are pulling out due to the ongoing conflict. Ships are also being delayed due to route changes.”  
Insurance companies including Gard, Skuld, NorthStandard, the London P&I Club and the American Club said cancellation of war risk cover would take effect from March 5, according to notices dated March 1 on their websites.  
War risk insurance is crucial because it covers losses caused by war and terrorism, which are explicitly excluded from standard marine, aviation and property policies. In practice, ocean‑going commercial ships won’t sail without insurance: port authorities, charterers, banks and regulators all view adequate cover as essential, making marine insurance a central pillar of global shipping.  
War risk premiums have risen as high as 1 percent of the value of a ship in the past 48 hours, from about 0.2 percent last week, industry sources said on Monday, which adds hundreds of thousands of dollars in costs for every shipment. For example, for a tanker worth $100 million, the war‑risk premium for a single voyage would jump from roughly $200,000 to about $1 million.