Freight costs, including surcharges, have increased by over 500% amid the Red Sea crisis as shipping companies were forced to take the longer route via Cape of Good Hope, according to the Federation of Indian Export Organisations.
"In the last few days, the situation has deteriorated," Chief Executive Officer of FIEO Ajay Sahai told NDTV Profit in an interview on Friday. "It is definitely a huge setback to the entire EXIM (export-import) trade."
Through this route, India exports to the bordering countries of North Africa and the Middle East, Europe and the east coast of the US. Commodities like perishables will be the worst affected by taking the longer route, said Sahai, director general of FIEO.
Ajay Sahai (Source: India International Arbitration Centre website)
Ajay Sahai (Source: India International Arbitration Centre website)
Earlier, when large shipping lines decided that they would not be operating, there were feeders. Now, the number of feeders is also depleting, and they can be non-operational in the coming days due to the threat to human life, according to Sahai.
Freight was only one of the elements as shipping lines had come up with additional surcharges, including contingency surcharge, Red Sea surcharge and peak-season surcharge, he said.
The Drewry's World Container Index has already gone up by around $1,000 in the last fortnight, he said. "If you're adding the surcharge, the increase is phenomenal."
Watch the interview below
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