The economic impact of the West Asia conflict, which began in late February with the assassination of Iran’s Supreme leader by American and Israeli forces, has been significant on India, and some of the effects would unfold over the next few quarters, according to a top transportation and logistics entrepreneur.
“The broader impact of the crisis is likely to be felt more strongly over the next few quarters rather than immediately,” said Vineet Agarwal, Managing Director, Transport Corporation of India Limited (TCI), one of the leading multi-modal transportation and logistics companies, in an interview.
“We could see some shift from road to rail as road freight rates have started to increase. Such modal shifts typically happen during periods of rising fuel costs. Fortunately, we are well positioned because we also operate a strong rail logistics and coastal shipping business,” he said.
He said some demand erosion could become visible in the coming quarters, and prices are set to increase in line with the rise in fuel prices. Some sectors, like ceramic tiles and paints, have been impacted the most.
“We have seen disruptions in several industries that rely heavily on gas consumption. In some sectors, gas availability has reduced significantly, while in others, gas prices have risen sharply. This directly affects production costs,” the TCI MD said.
“Industries such as tiles, paints, extrusion, and metal processing have seen visible pressure because of rising energy costs,” he said.
Stating that from a supply chain perspective, West Asia remains a critical trade corridor — not only for crude oil and natural gas but also for transhipment cargo and trade flows linked to India’s imports and exports, he said that, as a result, sectors such as fertilisers had seen “meaningful disruption”.
“Even if the geopolitical situation stabilises, supply chains typically take several months to normalise because containers and cargo flows remain disrupted for extended periods,” Mr. Agarwal emphasised.
Highlighting that the last few years had continuously witnessed one disruption after another — whether it was COVID-19, the Russia-Ukraine conflict, the Suez Canal blockage, or the ongoing West Asia crisis — he said the disruption cycle now “appears to have a prolonged catch-up effect on global supply chains.”
He said one of the direct impacts of the West Asia crisis was visible during March, when business volumes that generally increase during the financial year-end were relatively lower.
Several MSMEs and factories faced disruptions because of inadequate gas availability in certain regions, which impacted production levels and, consequently, cargo volumes, he emphasised.
“At the same time, bunker fuel prices — which directly impact shipping operations — increased by nearly 100% during that period. This created a significant cost impact for us. We accordingly increased coastal shipping freight rates by 25 to 30% to offset part of that increase,” he said.
Since diesel prices have increased over the last few days, this could be the beginning of a larger upward cycle.
“This will have an inflationary impact across sectors. Freight rates on road transportation are expected to rise, and ancillary inflationary pressures are likely to emerge across industries,” he said.
“Another impact has been labour movement away from MSME clusters towards hometowns, partly because of reduced employment availability and election-related factors. In some pockets, labour availability has tightened, and several states have also increased minimum wages, leading to higher operational costs,” he pointed out.
As far as fleet utilisation is concerned, the company has not seen any major issue yet.
“Our fleet utilisation levels continue to remain healthy. We own around 1,200–1,300 trucks directly, while we operate nearly 10,000 trucks through vendor and spot-market partnerships. This flexible operating model allows us to adjust pricing and utilisation relatively efficiently,” Mr. Agarwal said.
He said though the diesel price hike pass-through is still underway, freight rate increases may increase by nearly 10% over time depending on how fuel prices move from here.
In Q4 FY26 TCI reported consolidated revenue of ₹1,336 crore, reflecting a growth of 11.6% compared to ₹1,197 crore in the corresponding quarter last year. EBITDA stood at ₹174 crore, up 7.4%, while PAT increased by 8.7% to ₹125 crore.
For the full year, revenue grew 9.4% YoY to ₹4,965 crore, while PAT grew by 10.6% YoY to ₹460 crore.
For FY27 the company has given guidance of around 10–12% top-line growth.
“Some part of this growth will come from higher freight values rather than pure volume growth because freight costs themselves have increased,” he said.
For the current financial year the company has planned a capex of around ₹550–600 crore as compared to around ₹370 crore in FY26.
The planned investments include about ₹100 crore towards land and buildings, ₹250 crore towards new ships, ₹100–125 crore towards trucks and rail rakes and around ₹100 crore towards warehousing equipment.
“Overall, the planned capex is aimed at strengthening our multimodal infrastructure and long-term logistics capabilities,” he said.
“Part of the capex will be funded internally. We currently have nearly ₹250 crore cash on the books, and additional internal accruals are expected during the year. However, we may also undertake some borrowing as part of the overall funding mix,” he added.
