The commerce department is closely monitoring the developments in the Red Sea region as exporters are holding back their shipments, citing concerns over escalating freight costs. The increase in costs is a result of shipping vessels having to take longer routes to avoid the area due to ongoing attacks by Iran-backed Houthi rebels.
Shippers are rerouting their vessels around the Cape of Good Hope, leading to higher freight and insurance expenses. Agricultural and textile products are among the affected shipments. While there is currently no shortage of containers, exporters are facing potential delays of 12-14 days in turnaround time.
A senior government official expressed concerns about the impact on shipments if the situation persists. The official also highlighted that although exports to the US west coast remain unaffected, shipments to Europe, North Africa, and West Asia have been adversely affected. India exports goods worth $110 billion to these three regions.
The commerce department has not yet conducted a detailed assessment of the impact on Indian exports but acknowledged that exporters abroad may be holding back their shipments. In response to the crisis, the commerce secretary convened a meeting with exporters to address the challenges.
To mitigate the risks in the Red Sea, several shipments are being escorted with security assistance from the Ministry of Defence. Additionally, Danish shipping giant Maersk announced that it will redirect its vessels around the Cape of Good Hope indefinitely due to the volatile and heightened security risks in the region.
The situation continues to unfold, and a thorough evaluation of the delay’s quantification is yet to be conducted. The commerce department remains vigilant in monitoring the situation and its potential impact on Indian exports.
