- Container freight rates on trades out of India are surging due to the Red Sea crisis.
- The ongoing disruption has led to a significant boost in rates, affecting various routes, including India-Europe, India-Genoa, and India-US.
- The crisis is impacting different sectors, with some benefiting from rising rates, while others, like agricultural commodities and marine foods, face challenges due to perishable nature and lean margin profiles.
Red Sea Crisis Fuels Soaring Freight Rates Out of India
Container freight rates on trades originating from India have witnessed a substantial surge, driven by the ongoing crisis in the Red Sea. The escalation in rates is notable across various trade routes, including India-Europe, India-Genoa, and India-US.
Impact on India-Europe Trades
On the westbound India-Europe trade route, average short-term contract rates from West India (Jawaharlal Nehru Port or Mundra Port) to destinations like Felixstowe/London Gateway (UK) have experienced a remarkable increase. Rates for 20-foot and 40-foot containers have soared to US$3,600 and US$3,650, respectively, from US$600 and US$650 at the end of December.
Varied Impacts Across Sectors
The impact of the Red Sea crisis on Indian trade is not uniform across sectors. While certain industries, such as textiles, chemicals, and capital goods, may not be immediately affected due to better cost absorption abilities, sectors like agricultural commodities and marine foods face significant challenges. The perishable nature of goods and lean margin profiles limit their ability to absorb rising freight costs.
Concerns and Call for Solutions
Stakeholders in the Indian export industry express increasing concern about the Red Sea crisis’s impact, particularly on outbound shipments. The Federation of Indian Export Organisations (FIEO) emphasizes the need for addressing challenges through ensuring marine insurance availability, reducing freight charges, and providing easy and low-cost credit for exporters. If the crisis prolongs, there is a potential for equipment and space shortages, warns the Container Shipping Lines Association (CSLA) executive director.
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Source: Container News
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