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Cost of freight, insurance rises for shipments due to Red Sea conflict; imports currently cushioned by inventory
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The cost of freight and insurance for shipments has risen in the last one month owing to the ongoing conflict in the Red Sea, which has forced ships to avoid the Suez Canal and take a longer route around the African peninsula, sources in the government told CNBC-TV18. Government officials met shipping companies and exporters …
The cost of freight and insurance for shipments has risen in the last one month owing to the ongoing conflict in the Red Sea, which has forced ships to avoid the Suez Canal and take a longer route around the African peninsula, sources in the government told CNBC-TV18.
Government officials met shipping companies and exporters on Thursday, January 4, to take stock of the financial impact of the Red Sea conflict, where it was informed that, though the cushion of a month’s inventory is currently available for imported items, disruptions may arise in the near future if the conflict prolongs.
A government official has said that there’s no shortage of shipping containers, but the turnaround time has increased by 14 days.
With the containers taking a longer route across Africa, trade of goods with the US, Europe, and Latin America isn’t just taking longer but also costing more.
ALSO READ | Red Sea woes will trigger surge in freight costs and export delays: Centrum
The official also said that the Ministry of Defence is helping to escort many ships with consignments in the course of their travel on the high seas.
On December 21, 2023, CNBC-TV18 reported that basmati rice exports from India to Western countries may become 15% to 20% more expensive if the conflict in the Red Sea doesn’t subside soon.
Basmati rice exports from India had grown by 20% year-on-year in the period between April 1 to December 8, 2023.
However, the government remains hopeful that the increased prices of basmati rice won’t impact its overall global demand.
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