Indian exports are witnessing a significant increase in expenses, more than doubling, attributed to the attacks by the Yemeni Houthi militia on ships in the Red Sea, as per industry officials.
According to a Reuters report, around 80 percent of India's monthly goods trade with Europe, valued at nearly $14 billion, typically flows through the Red Sea.
Since the onset of Houthi militant attacks in November, exporters have seen that about 95 per cent of vessels are choosing to reroute around the Cape of Good Hope at the southern tip of Africa. This change in course has led to an additional 4,000 to 6,000 nautical miles and an extension of journey durations by 14-20 days for shipments originating from India.
Prominent shipping companies, such as Maersk, MSC, and Hapag Lloyd, have either ceased or temporarily suspended their operations in the Red Sea.
As per sources cited in the report, the price of a 24-foot shipping container traveling from India to Europe, the eastern coast of America, and the UK has increased to $1,500 from $600 prior to the Red Sea attacks.
Arun Kumar Garodia, Chairman of the Engineering Export Promotion Council of India (EEPC), told Reuters that the escalation in shipping costs has eradicated our profit margins. He mentioned that a majority of buyers are unwilling to reconsider prices.
He further stated that the escalating shipping costs and order delivery delays would impact Indian exports worth at least $10 billion in the fiscal year until March 2024.
Moreover, delays in shipping schedules have resulted in about a quarter of this month's exports being held up.