Indian export officials have reported that export costs have more than doubled due to tensions in the Red Sea. Government estimates show that approximately 80% of India’s commodity trade with Europe, valued at around $14 billion monthly, typically passes through the Red Sea.
Tensions in the Red Sea began in November when the Yemeni Houthi group threatened Israeli ships or any carrying Israeli goods from passing through the Bab-el-Mandeb Strait and the Red Sea in solidarity with the Gaza Strip, which has been under continuous Israeli aggression for over 100 days resulting in the martyrdom of more than 24,000 Palestinians and injuring over 60,000, most of them children and women.
The situation escalated when the United States and Great Britain launched missile attacks on Houthi-affiliated sites in Yemen, labeling it a response to threats to navigation in the Red Sea. Last month, the United States announced the formation of the Prosperity Guard Alliance to curb Houthi attacks, with participation from several countries.
Exporters say 95% of ships have changed their route to pass south of Africa via the Cape of Good Hope, increasing the journey from India from 4,000 to 6,000 nautical miles, and extending travel time from 14 to 20 days since the Houthi militants began attacking ships in November 2023.
Major shipping companies, including Maersk, MSC, and Hapag Lloyd, have decided to stop or suspend their operations through the Red Sea.
Four Indian exporters, including the head of an export federation, reported that the cost of shipping a 24-foot container from India to destinations in Europe, the United States, and Britain rose to $1,500, up from $600 before the Red Sea tensions.
Profits Erased
Chairman of the Engineering Export Promotion Council in India, Arun Kumar Garodia, said, “Our profit margins have been wiped out with the increase in shipping costs,” noting that most buyers are not prepared to review prices.
He added that Indian exports, worth no less than $10 billion, will be impacted in the fiscal year ending March 2024, due to rising shipping costs and delivery delays.
Shipping companies have threatened to raise shipping costs further later this week.
Exporters have also stated that about a quarter of this month’s exports are stalled due to delays in shipping schedules.
Satya Srinivas, a senior official at the Indian Ministry of Commerce, said on Monday, “The majority of ships’ sailing has been affected and generally postponed for a period ranging between two and three weeks due to delays from vessels that took longer routes.”
He also mentioned that some shipments were recently suspended, though December exports, estimated at $38.45 billion, were not affected by the Red Sea crisis.
