The New Year has failed to bring some cheer to Indian tea exporters so far. While exporters are facing sluggish demand as far as new contracts are concerned, for old contracts negotiations are on with overseas buyers for the payment of higher shipping costs.
Shipping costs have increased manifold due to a significant spike in container freight rates as the Red Sea crisis continues, which is forcing cargo ships to take longer routes. However, amid gloomy outlook, Iraq continues to be saviour of the tea exporters.
“As far as new export contracts are concerned, nothing really great is happening. The Iraq market has generated some good demands. Some new contracts have been signed, where good quantities are going. Otherwise, nothing great. There is sluggishness in overseas markets for new contracts in South Indian tea,” Dipak Shah, Chairman, South India Tea Exporters Association, told businessline.
March will be key for North
India’s tea export is likely to be down in 2023 calendar year compared to 2022, mainly due to a significant decline in export to Iran. Despite the overall decline, shipments to Iraq witnessed an increase. The country’s tea exports were 231.08 million kg (mkg) in 2022 calendar year.
“For executing old export contracts, our exporters are making losses due to abnormally high freight rates. We have to monitor what is happening to the freight rates,” said Indian Tea Exporters Association (ITEA) chairman Anshuman Kanoria.
“New export contracts for North Indian tea will be signed after tea production starts in March for the new season,” Kanoria said.