Indian logistics players do not see much of a direct impact on their business of the UK voting for Brexit, but many firms are in ‘wait and watch’ mode on an indirect impact, such as a possible change in shipping routes and the fate of shipping insurance firms based out of London.
Blue Dart says it does not see any direct impact on the domestic logistics industry. “I don’t think there will be much of an impact on the sector. Blue Dart has most of its business within India, with 8 per cent coming from the international segment. I don’t think there will be an impact on that as well,” Anil Khanna, Managing Director, Blue Dart , told BusinessLine .
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There were varied reactions from the shipping industry.
“Indian shipping firms will not be impacted, as for India, the European Union (EU) is a trading partner and so is the UK. The routing in due time might change. Shipping firms will have to watch the impact of P&I (Protection & Indemnity) clubs. The front-end offices of most of these firms are in London, under the financial authority of the UK. But, many of these firms are registered in Brussels, or other parts of the UK,” said Anil Devli, CEO, Indian National Shippers Association.
However, S Chandrasekaran, an independent policy analyst in the shipping and foreign trade sector, feels that Brexit will have serious impact on the international shipping route.
The Gibraltar, a part of Britain, but tip of the Spanish peninsula, is the entry point to the Atlantic from the Mediterranean Sea. The people of Gibraltar have voted to “remain” in the EU." Some time ago, people in Gibraltar had voted through a referendum to remain in the UK.
"As the UK voted to quit, there will be higher tension leading to higher insurance and shipping rates," said Chandrasekaran. Through Strait of Gibraltar, some 71,000 vessels cross every year carrying 240 million tonne of cargo, accounting for 14 per cent of maritime traffic.
Echoing a similar view, Mantrana Maritime Advisory said Brexit could create a negative impact on trade and shipping.
“London is a shipping hub where all the insurance, banking firms are headquartered. Brexit could generate local competition between European countries to create a new hub with an intention to undermine the dominance of London as a shipping hub,” said Anand V Sharma, Director, Mantrana Maritime Advisory .
The vote reduces the strength of Europe to generate stimulus and growth. "Growth stagnation would directly impact trade and port traffic, including utilisation of ships. A fall in utilisation of ships would lead to a fall in charter rates, which are already at rock bottom,” said Sharma.
“Currency fluctuation might undermine India’s exports of goods and services to the UK. For locals in the UK, imports have already become 10 per cent expensive due to currency devaluation. This, along with further devaluation, could trigger curbing spending, leading to a fall in trade,” added Sharma.