The cost of Indian exports has more than doubled due to the Yemeni Houthi militia’s attacks on ships in the Red Sea, industry officials said on Monday.
Around 80% of India’s goods trade with Europe passes through the Red Sea channels, at nearly $14 billion a month, according to government estimates, is vulnerable in the current scenario
Exporters said 95% of vessels had rerouted around the Cape of Good Hope on the southern tip of Africa, adding 4,000 to 6,000 nautical miles and 14-20 days to journeys from India, since Houthi militants began attacking shipping in November.
Major shipping has stopped or temporarily halted Red Sea operations, including Maersk, MSC, Hapag Lloyd.
The cost of a 24-foot shipping container from India to Europe, the eastern cost of America and the UK had risen to $1,500 from $600 before the Red Sea attacks, export associations said.
Experts say Indian exports worth at least $10 billion would be hit in the fiscal year to March 2024, due to the rising shipping costs and delay in delivery of orders, due to the conflict-borne region.
Shipping companies have threatened to raise freight costs further later this week, even as a quarter of this month’s exports are held up due to delays in schedules.
‘The sailing of most of the ships has been impacted and generally postponed by 2-3 weeks as the incoming ships, with longer routes, are delayed,’ an Indian trade ministry official said on Monday.
Some recent consignments had been put on hold, although December exports, estimated at $38.45 billion, were not impacted by the Red Sea crisis, he added.
The government hasn’t released any official estimates on the impact of the Red Sea crisis on Indian exports.
The number of ships passing through the Suez Canal is down about 44% compared to the average for the first half of December, according to research think tanks.
Vessels with a combined tonnage of about 2.5 million gross tons passed through in the week to Jan. 3, compared with about 4m tons at the start of last month.
India usually exports a variety of goods including petroleum products, cereals, and chemicals using the Red Sea route.