Indian exporters are facing an increase in shipping costs

Officials in the Indian export sector have stated that the cost of exports has increased by over twice as much due to attacks on ships in the Red Sea.

Government estimates indicate that around 80 percent of India’s trade with Europe, valued at about 14 billion dollars per month, typically passes through the Red Sea.

According to sources, 95% of ships have changed their course to the Cape of Good Hope route around Africa, which has increased the distance of the trips from India from 4000 to 6000 nautical miles and extended their duration from 14 to 20 days since the Houthi rebels began attacking ships in November.

Major shipping companies, including Maersk, MSC, and Hapag-Lloyd, have decided to cease or suspend their operations across the Red Sea.

Four sources, including the head of one of the exporters’ unions, reported that the cost of shipping a 24-foot container from India to various locations in Europe, the United States, and Britain has increased to $1500 from $600 prior to the attacks in the Red Sea.

Aaron Kumar Garg, Chairman of the Engineering Exports Promotion Council of India, said:

“Our profit margins have been eroded due to the increase in shipping costs. Most buyers are not willing to reconsider the prices.”

He further stated that Indian exports worth at least $10 billion will be negatively affected in the fiscal year ending in March 2024 due to rising shipping costs and delays in order deliveries.

He stated that shipping companies have threatened to increase shipping costs further later this week.

The sources also stated that about a quarter of exports this month are on hold due to delayed shipping schedules.

Sathya Srinivas, a senior official at the Indian Ministry of Commerce, stated that most ships were affected and generally delayed for a period ranging from two weeks to three due to the ships taking longer routes.

He added that some shipments have been suspended recently despite the fact that December exports, valued at an estimated $38.45 billion, were not affected by the crisis in the Red Sea.

(Reuters)