The cost of Indian exports has more than doubled as a result of the attacks on ships in the Red Sea by the Yemeni Houthi militia, according to industry officials on Monday.
Government estimates suggest that around 80% of India’s goods trade with Europe, which is valued at almost $14 billion per month, typically passes through the Red Sea.
Exporters have reported that 95% of vessels have been rerouted around the Cape of Good Hope on the southern tip of Africa since the attacks began in November, adding 4,000 to 6,000 nautical miles and 14-20 days to journeys from India.
Major shipping lines such as Maersk, MSC, and Hapag Lloyd have stopped or temporarily suspended operations in the Red Sea.
According to four exporters, including the head of an export association, the cost of shipping a 24-foot container from India to Europe, the eastern coast of America, and the UK has increased from $600 to $1,500 as a result of the Red Sea attacks.
Arun Kumar Garodia, Chairman of the Engineering Export Promotion Council of India (EEPC), stated that the rising shipping costs have wiped out profit margins, and most buyers are unwilling to adjust prices.
He further explained that Indian exports worth at least $10 billion will be impacted in the fiscal year ending in March 2024 due to the increased shipping costs and delivery delays.
Goradia mentioned that shipping companies have threatened to further raise freight costs later this week.
Exporters also expressed that approximately 25% of this month’s exports are delayed due to disruptions in shipping schedules.
Satya Srinivas, a senior official from the Indian trade ministry, stated that the sailing of most ships has been delayed by 2-3 weeks as a result of longer routes taken by incoming ships.
He also noted that while some recent consignments have been put on hold, the December exports, which are estimated at $38.45 billion, have not been affected by the Red Sea crisis.
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