Indian traders and shipping companies have quietly moved millions of dollars in cargo away from traditional Persian Gulf routes, rerouting shipments through East African ports as tensions between Iran and Israel escalate toward open conflict. The shift, which began accelerating in late 2024, is reshaping how one of the world's largest economies moves its imports and exports. Freight analysts in Mumbai and Dubai say the change is not temporary.
Ocean carriers abandon Gulf routes
Major shipping lines including Maersk and CMA CGM began avoiding Iranian territorial waters and the Strait of Hormuz months ago. Insurance premiums for vessels passing through the region jumped sharply after Iranian forces seized several commercial ships in retaliatory strikes. Executives at India's Shipping Corporation confirmed their bulk carriers now sail around the Cape of Good Hope or divert through the Tanzania corridor to avoid the Persian Gulf entirely. The detours add 10 to 14 days to delivery times but avoid what one freight manager called "an unacceptable war premium."
Tanzania's Port of Dar es Salaam gets a surprise boom
The Port of Dar es Salaam has emerged as an unexpected beneficiary. Container throughput at Tanzania's main harbour climbed 23 percent in the first quarter of 2025 compared with the same period last year, according to Tanzania Ports Authority data. Customs officials in the city reported record clearance volumes as Indian-bound cargo trains roll south toward the Indian Ocean. The Tanzanian government fast-tracked new berth construction at a cost of $420 million to handle the surge. Local warehouse operators in the Dar es Salaam free zone told en reporters the volume of goods stored for transshipment has doubled.
Oman's traditional role erodes
Sultan Haitham bin Tariq's government in Muscat watched nervously as cargo volumes through Omani ports declined. The Port of Salalah, which handled 4.7 million TEUs last year, recorded a 12 percent drop in Indian-origin traffic during the first three months of 2025. Omani freight brokers said major retailers and manufacturers in Gujarat and Tamil Nadu have begun negotiating long-term contracts with Tanzanian logistics firms instead of their traditional Omani partners. The shift threatens a revenue stream Oman depends on as its oil exports face separate market pressures.
Russia gains ground as India's northern alternative
India has simultaneously deepened its northern trade corridor with Russia. The International North-South Transport Corridor, a 5,200-kilometre route connecting Mumbai to Moscow via the Caspian Sea, saw cargo volumes surge 67 percent year-on-year. The route bypasses both the Persian Gulf and the Suez Canal entirely. Trade officials from both countries met in New Delhi in February to expand capacity at the Iranian ports of Bandar Abbas and Chabahar, which serve as critical junctions on the corridor despite Iran's worsening security situation. The North-South route now carries machinery, pharmaceuticals, and agricultural commodities that previously moved through Gulf shipping lanes.
Indian manufacturers absorb new costs
Factory owners in the industrial belts of Gujarat and Maharashtra face mounting logistics bills. The longer sea routes add $800 to $1,200 per container in fuel and operational costs, according to the Federation of Indian Export Organisations. Small and medium enterprises exporting textiles and chemicals say the surcharges threaten profit margins already squeezed by global competition. The Indian government has not announced any subsidy programme for affected exporters, though the commerce ministry held two rounds of industry consultations in March. Trade analysts in Mumbai expect the extra costs to eventually flow into consumer prices for imported goods.
Energy imports remain the hardest problem
Oil shipments present the starkest dilemma. India imports roughly 85 percent of its crude requirements, and a significant portion historically arrived via Iranian terminals before Western sanctions reduced that flow. The current Middle East instability has pushed Brent crude prices above $92 per barrel, increasing India's import bill by an estimated $14 billion annually at current consumption rates. State-owned refiners in Vadinar and Mangalore have quietly increased purchases from Russian producers, accepting discounted Urals crude as a practical alternative to Gulf-sourced energy. The swap satisfies India's energy needs while avoiding ships that insurers refuse to cover in conflict waters.
What happens next
Shipping executives expect the route diversification to solidify regardless of whether diplomatic efforts calm the Persian Gulf situation. Once companies invest in new contracts, warehouses, and agent relationships in Tanzania or along the North-South corridor, they rarely reverse those decisions. The Indian government will publish updated trade route statistics in its quarterly balance of payments report, due in July. Watch that data: a permanent decline in Gulf-adjacent shipping would signal a structural realignment, not a temporary adjustment. Tanzania's ports authority has already submitted plans for a second major expansion, betting the new routes are here to stay.
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