ECONOMYNEXT – Sri Lanka’s tea trade is navigating a deepening disaster as extended battle in West Asia has jeopardized the island nation’s high export commodity, tea.
For the reason that US-Israel assault on Iran on February 28, Purple Sea turmoil has transitioned from a logistical delay to a systemic risk.
Excessive-value teas have gotten unsellable, and Port of Colombo warehouses are reaching most capability, high exporters say.
This geopolitical impasse arrives at a time when the 1.5 billion greenback export trade is battling the decay of colonial-era labour fashions, gas scarcity, and local weather instability.
“Ceylon Tea” maintains a various world footprint, with its export technique at the moment centered on sustaining these relationships with the principle patrons who’re historically concentrated in West Asia, the Commonwealth of Impartial States (CIS), and more and more, East Asia and the European Union.
The continuing battle has disrupted main transit hubs like Dubai and Doha, impacting the pace and value of reaching conventional patrons within the area.
The instability within the area threatens fairly a good portion of Sri Lanka’s tea exports.
Anil Cooke, Managing Director of Asia Siyaka Commodities PLC, mentioned the checklist of nations which can be being bombed in the meanwhile throughout the Gulf are the important thing marketplace for Sri Lanka’s tea, together with Iraq, Iran, Saudi Arabia, and the UAE.
“Whenever you add North Africa to that checklist of Center Japanese international locations and think about all of the tea being shipped by means of the Purple Sea, we’re speaking of a few 60 to 70 p.c affect to our complete (tea) exports,” Cooke advised EconomyNext.
Painful Impacts
Sri Lanka has been paying a 251 million greenback crude import on account of Iran with tea by means of a barter system agreed with the central banks of each international locations as US sanctions have prevented all international locations buying and selling with Tehran in US {dollars}.
“The affect Iran has available on the market is disproportionate to the volumes bought. Their absence or lowered demand creates rapid value corrections,” Cooke mentioned.
And value correction has been painful for native producers and companies.
The costs on the first public sale after the beginning of West Asia battle fell 4.3 p.c, whereas quantity bought additionally dropped sharply by 13.1 p.c, official knowledge confirmed.
Costs of particular person shares in listed tea corporations have fallen as worse as 30 p.c.
For main exporters, the disaster has transitioned from delays to a “complete blockage”, an official at Sri Lanka’s largest tea exporter, Akbar Brothers, advised EconomyNext.
“We will purchase the tea, we are able to course of the tea, pack the tea, the whole lot, however we are able to’t ship,” the official, who requested to not be named, mentioned.
“It’s all prepared for cargo, however we are able to’t ship. So our warehouses are being occupied with all packed and prepared cargo.”
Trade stakeholders say some shipments are at the moment stranded or offloaded at interim ports, whereas a number of exporters at the moment have items in transit which can be going through vital disruptions.
“In sure cases, delivery corporations are even asking exporters to retrieve their cargo independently,” Cooke mentioned.
And that has now elevated the insurance coverage premium for export cargoes, which can make Sri Lanka tea costly within the world market.
Unaffordable Premium
The disaster, which successfully paralyzed the Strait of Hormuz and the Suez Canal, has compelled insurers and delivery strains to implement emergency measures that immediately threaten the competitiveness of Sri Lanka’s key export sectors.
Premiums for vessels transiting high-risk zones have reportedly surged by over 1,000 p.c in some cases.
For prime-value tankers or container ships, insurance coverage charges that had been beforehand round 0.25 p.c of the vessel’s worth have spiked to as a lot as 1.5 to three p.c, including hundreds of thousands of {dollars} in prices per journey.
Main delivery strains (together with Maersk, MSC, and Hapag-Lloyd) have launched Emergency Battle Surcharges and Battle Danger Surcharges.
These charges usually vary from 1,500 to 2,000 {dollars} per 20-foot container (TEU) and as much as 3,000 to three,500 {dollars} for 40-foot containers, considerably growing the landed price of Sri Lankan items.
Since delivery prices and insurance coverage surcharges are not often borne by the importer throughout a disaster, Sri Lankan exporters should typically take up these charges themselves to maintain their merchandise price-competitive.
That is inflicting a weekly income loss estimated between 10 million and 15 million {dollars} for the tea trade alone.
To keep away from the Strait of Hormuz and the Suez Canal, vessels are rerouting across the Cape of Good Hope. This provides 15–20 days to transit occasions for shipments to Europe and the US, disrupting just-in-time supply schedules and growing gas consumption prices.
The volatility has led to delayed funds for shipments already in transit.
Moreover, the Tea-for-Oil barter association with Iran has develop into almost inconceivable to execute because of the bodily blockade of commerce routes and heightened banking sanctions. (Colombo/Mar18/2026)
