4 min readNew DelhiJan 5, 2024 07:12 AM IST
First published on: Jan 4, 2024 at 10:35 PM IST
Shippers, exporters and freight forwarders on Thursday sought additional security in the crucial Red Sea trade route at a meeting called by the commerce secretary Sunil Barthwal to assess the impact on Indian goods trade, sources aware of the development said. Top shipping companies such as Swiss-Italian Mediterranean Shipping Company are learnt to have conveyed their inability to cushion exporters from additional cost impact on existing contracts, given the need to reroute shipments via a longer route to avoid the Red Sea section.
The Indian Express last month reported that the freight rates for Indian shipments headed to Europe and Africa could surge as much as 25-30 per cent if the ongoing security concern along the Red Sea trade route – the shortest trade route for ships moving from Asia to Europe – were to continue.
“The government wanted to assess the impact during the meeting and understand how many exports could be impacted. Several shippers and exporters have sought increased security in the area as traders are resorting to holding back products,” Federation of Indian Export Organisations (FIEO) Director-General and Chief Executive Officer Ajay Sahai said.
“A number of exporters are holding back shipments because the freight rates have gone up as major shipping lines are using the Cape of Good Hope route,” Sahai added.
The External Affairs Ministry on Thursday said that the government is closely watching the unfolding situation in the Red Sea, amid growing global concerns over Houthi militants stepping up attacks on several commercial ships in the region.
Earlier, the Indian Navy said its ships and aircraft remain “mission deployed” to maintain surveillance and undertake maritime security operations in the North and Central Arabian Sea.
“We attach very high importance to freedom of navigation, free movement of commercial shipping. It is an evolving situation and we are looking at all aspects of it,” External Affairs Ministry Spokesperson Randhir Jaiswal said at a media briefing.
Liberian-flagged vessel MV Chem Pluto, with 21 Indian crew members, was the target of a drone attack off India’s west coast on December 23 that triggered security concerns in New Delhi.
Besides MV Chem Pluto, another commercial oil tanker that was on the way to India came under a suspected drone strike in the Southern Red Sea on the same day. The vessel had a team of 25 Indian crew.
According to think tank Global Trade Research Initiative (GTRI), India is heavily reliant on the Bab-el-Mandeb Strait that leads to the Suez canal in the Red Sea for its crude oil, LNG imports and trade with parts of West Asia, Africa, and Europe and any disruption to shipping through the strait could have a significant impact on India’s economy and security.
After one of worst escalation in years, large shipping firms include the Danish firm Maersk and MSC, German Hapag-Lloyd, and French CMA CGM (Compagnie Maritime d’Affrètement – Compagnie Générale Maritime) stopped plying ships though the region.
Within a week after announcing plans to resume operation in the Red Sea region, shipping giant Maersk had to suspend passage due to fresh attacks by Yemen-based Houthi rebels.
The United States and 12 allies issued what amounted to a final warning to Houthi rebels on Wednesday to cease their attacks on vessels in the Red Sea or face potential targeted military action, AP reported, adding that the Yemen-based militants have carried out at least 23 attacks in response to the Israel-Hamas war in Gaza since Dec 19.
Houthi military helicopter flies over the Galaxy Leader cargo ship in the Red Sea in this photo (Reuters) 
Share
