CHENNAI: A container crisis is looming in the Red Sea, thanks to geo-political issues, which has the potential to disrupt India’s exports to Africa and Latin America.
According to exporters, shipping freight rates are expected to double on some routes, with exports of petroleum, automobiles, marine food and agri commodities likely to be affected.
Exporters are complaining of container shortage at ports on the west coast and have requested leasing companies and shipping lines to move some of the containers from the east to the west.
“Petroleum exports are expected to be most affected, while there will be an impact on overall exports too and we see this problem persisting for a while,” said Ajay Sahai, director general, FIEO.
A report by Crisil said, players operating in agricultural commodities and marine foods could see “significant impact due to the perishable nature of their goods and/or lean margin profiles, which limit their ability to absorb the risks from rising freight cost”. Players operating in sectors like textiles, chemicals and capital goods may not be immediately impacted but a prolonged crisis can make these sectors also vulnerable as “working capital cycles would get stretched with orders put on hold”.
Automobile companies are factoring in freight hikes and longer time shipments into margin calls. During quarterly results call, Bajaj Auto executive director Rakesh Sharma explained what the pinch means for automobile companies. “The Red sea imbroglio has caused delays of around three weeks to Latin America and parts of Africa and freight rates have doubled to many destinations,” he said, adding, December-January shipping availability had some impact. “Alternative routes have been put in place and ordering levels of channel partners adjusted to take note of longer shipping time,” he said.
“Inflation is beginning to settle down but (revival to peak levels) may be delayed due to Red Sea container availability,” said KN Radhakrishnan, CEO TVS Motor.
According to exporters, shipping freight rates are expected to double on some routes, with exports of petroleum, automobiles, marine food and agri commodities likely to be affected.
Exporters are complaining of container shortage at ports on the west coast and have requested leasing companies and shipping lines to move some of the containers from the east to the west.
“Petroleum exports are expected to be most affected, while there will be an impact on overall exports too and we see this problem persisting for a while,” said Ajay Sahai, director general, FIEO.
A report by Crisil said, players operating in agricultural commodities and marine foods could see “significant impact due to the perishable nature of their goods and/or lean margin profiles, which limit their ability to absorb the risks from rising freight cost”. Players operating in sectors like textiles, chemicals and capital goods may not be immediately impacted but a prolonged crisis can make these sectors also vulnerable as “working capital cycles would get stretched with orders put on hold”.
Automobile companies are factoring in freight hikes and longer time shipments into margin calls. During quarterly results call, Bajaj Auto executive director Rakesh Sharma explained what the pinch means for automobile companies. “The Red sea imbroglio has caused delays of around three weeks to Latin America and parts of Africa and freight rates have doubled to many destinations,” he said, adding, December-January shipping availability had some impact. “Alternative routes have been put in place and ordering levels of channel partners adjusted to take note of longer shipping time,” he said.
“Inflation is beginning to settle down but (revival to peak levels) may be delayed due to Red Sea container availability,” said KN Radhakrishnan, CEO TVS Motor.
