New Delhi: The Suez Canal blockage that has disrupted east-west shipping could impact India’s trade and curtail key manufacturing supplies while raising transport costs as shipping rates spike due to the crisis.
This route is used for Indian exports/imports worth USD 200 billion to/from North America, South America and Europe. It includes petroleum goods, organic chemicals, iron and steel, automobile, machinery, textiles and carpets, handicrafts including furniture, leather goods, etc.
The Centre has chalked out a four-point plan to deal with the situation arising from the blockage of the Suez Canal including advising ships to re-route via Cape of Good Hope.
This plan was chalked out in a meeting convened by the logistics division, department of commerce, government of India Friday. It includes prioritisation of cargo, freight rates, advisory to ports and re-routing of ships.
The meeting was chaired by Pawan Agarwal, Special Secretary (Logistics) and attended by the Ministry of Ports, Shipping and Waterways, ADG Shipping, Container Shipping Lines Association (CSLA) and Federation of Indian Export Organisations (FIEO).
It was noted in the meeting that over 200 vessels are waiting on the North and South sides of the Suez Canal and about 60 vessels are getting added to the queue on a daily basis, according to the statement.
Under the prioritisation of cargo, it was decided that FIEO, MPEDA and APEDA will jointly identify cargo particularly perishable cargo for priority movement and work with the shipping lines for the same.
Once the blockage is over, it is expected that some bunching may take place, especially at the ports of JNPT, Mundra and Hazira, it said.
A 193-km canal, which is an artificial sea-level waterway in Egypt, connects the Mediterranean Sea to the Red Sea and provides the shortest sea link between Asia and Europe. The 224,000-tonne container ship was grounded in the Suez Canal on Tuesday morning, completely blocking the traffic along the waterway and delaying a number of ships carrying cargo ranging from oil to consumer goods.
The route accounts for about 12% of global trade.
Crude prices fell after a brief spike as this is the lean season.
The delay will exacerbate the shortage of containers and further lift freight rates, exporters said, as the canal is one of the world’s busiest trade routes for oil and consumer goods shipments between Asia and Europe.
