Gulf instability threatens Pakistan’s export competitiveness, warn industrialists

President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Atif Ikram Sheikh stated that geopolitical instability in the Gulf threatens Pakistan’s export competitiveness, noting that nearly 80% of the country’s crude oil imports and about one-quarter of its liquefied natural gas (LNG) pass through the Strait of Hormuz, and any prolonged disruption would inevitably strain foreign exchange reserves and lead to significant inflationary pressure.

In a statement released on Monday, Sheikh 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 the country’s economy.

“Sheikh highlighted that following the outbreak of the Iran conflict in late February 2026, global shipping markets have been thrown into turmoil,” the FPCCI said in a press release.

“With commercial vessel traffic through the strategic waterway grinding to a halt and shipping lines having imposed crippling war-risk surcharges – raising fears of a balance of payments crisis for Pakistan,” the president was quoted as saying.

Sheikh highlighted that the financial toll on logistics was immediate and staggering, adding that container freight rates on major routes have skyrocketed.

He added that shipping lines were introducing emergency war-risk surcharges ranging from $1,500 to $3,500 per standard container (TEU).

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“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.

Sheikh elaborated that the crisis is already reverberating through the domestic economy as transhipment 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.

Meanwhile, Saquib Fayyaz Magoon, SVP FPCCI, said that compounding the crisis for local manufacturers is the recent Rs55 per litre spike in domestic diesel prices, which has pushed inland transportation costs up by an estimated 15-25%.

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 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.