KUALA LUMPUR, March 11 (Xinhua) -- Malaysia's manufacturing sector faces direct exposure to disruptions in global shipping routes from the Middle East conflict and volatility around the Strait of Hormuz, the Federation of Malaysian Manufacturing (FMM) said on Tuesday.

A drone photo taken on June 13, 2024 shows the factory of the Alliance Steel (M) Sdn. Bhd. plant at the Malaysia-China Kuantan Industrial Park (MCKIP) in Pahang state of Malaysia. (File photo: Xinhua)

FMM President Jacob Lee Chor Kok said in a statement that more than 90 percent of Malaysia's trade moves by sea, and recent Middle East developments already show rising freight costs and operational disruption.

According to him, major shipping lines introduced emergency freight increases for cargo moving to and from Gulf ports, while war-risk insurance premiums have also risen sharply.

"Manufacturers exporting to Gulf markets now face higher freight costs, tighter vessel capacity and uncertainty over delivery schedules. Higher global oil prices may also increase industrial energy costs and logistics expenses across the manufacturing sector," it said.

While the Gulf Cooperation Council (GCC) countries are not Malaysia's largest export destination, it noted the region remains an important secondary market and a key transshipment hub for cargo moving onward to Africa, Central Asia and parts of Europe.

"Disruptions to Gulf ports therefore affect not only direct exports to the region but also shipments destined for other markets," it added.

The FMM also calls for the government to establish an export crisis response task force as an ad hoc government-industry mechanism that can be activated when trade disruptions arise to address operational challenges faced by exporters and shippers.