The freight hike issue was flagged in the meeting of the Board of Trade (BoT) chaired by Commerce and Industry Minister Piyush Goyal, Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said.
He said “It is a serious issue” and the problem will hurt the global demand for goods besides pushing inflation in different countries. The situation around the Bab-el-Mandeb Strait, a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to recent attacks by Yemen-based Houthi militants. Due to these attacks, the shippers are taking consignments through the Cape of Good Hope, encircling Africa, resulting in delays of almost 14-20 days and also higher freight and insurance costs.
“At some places, the freight rates have jumped by 600 per cent,” Sahai said adding “We request for developing an Indian Shipping Line of global repute.” Kolkata to Rotterdam freight increased from USD 500 to USD 4,000 now due to the Red Sea crisis. According to the FIEO, India’s outward remittance on transport services is increasing with rising exports. “We remitted over USD 80 billion as transport service charges in 2021. As the country moves towards the goal of USD 1 trillion in exports, this will touch USD 200 billion by 2030. A 25 per cent share by the Indian Shipping Line can save USD 50 billion year on year basis,” he added.
The Indian private sector may be engaged to develop such shipping lines as this will also reduce arm twisting by foreign shipping lines, he said. Around 80 per cent of India’s merchandise trade with Europe passes through the Red Sea and substantial trade with the US also takes this route. Both these geographies account for 34 per cent of the country’s total exports.
