Red Sea Crisis: Shipping Corp called into action as exports take a hit

During a press briefing, Ports, Shipping and Waterways Secretary TK Ramachandran stated that one of the major concerns raised was the refusal of foreign shipping lines to allocate slots for Indian goods amid a surge in freight rates and global demand and the negative impact on trade due to the absence of an Indian shipping line.

“The SCI has deployed a container ship with a capacity of 9,000 twenty-foot equivalent units (TEU), which will operate every 3 to 4 days. Additionally, the state-owned company plans to purchase five second-hand container vessels, significantly boosting our container handling capacity in the country. SCI will also regularly acquire containers to increase the stock of available containers,” he said.

During the press briefing, Goyal said the various objectives of the meeting to understand and resolve issues being faced by the exporters and importers in the shipping and cargo industry were met and that the deliberations took stock of the emerging geopolitical and economic scenario. “Collectively, we made decisions to promote a trust-based working environment for faster processing of cargo during exports,” he said.

Goyal said that a multidisciplinary help desk to support exporters has been set up and the handling and loading costs of empty containers by the Container Corporation of India Ltd. (CONCOR) has been reduced. He said that empty containers will be allowed to be stored in the yard at the Jawaharlal Nehru Port Authority (JNPA).

In June, The Indian Express reported that the Red Sea crisis had caused shipping rates to rise several fold, prompting exporters to urge the government, during the pre-Budget consultation chaired by Finance Minister Nirmala Sitharaman, to develop Indian shipping lines of global standing to support exports. Exporters informed the FM that India’s outward remittances on transport services had reached $109 billion.

This paper had also reported that exporters were calling for an Indian shipping line, as foreign shipping lines were “arm twisting” Indian traders amidst increasing freight rates. Notably, the Red Sea crisis has led to a surge in profits for foreign shipping lines. In May, shipping group Maersk raised its full-year profit guidance after reporting strong first-quarter earnings, attributing this to robust demand and higher freight rates as ships opted for longer routes to avoid conflict in the Red Sea.

Exporters said that weeks after the attacks along the crucial Red Sea shipping route, Asia-to-North Europe rates had more than doubled to over $4,000 per 40-foot container. They also complained about arbitrary surcharges imposed during critical export periods. The Red Sea region is vital for 30 per cent of global container traffic and 12 per cent of global trade, with about 95 per cent of vessels now rerouting around the Cape of Good Hope, adding 4,000 to 6,000 nautical miles and 14 to 20 days to journeys.