The Red Sea crisis precipitated by the attacks by Yemen’s Houthi rebels on container vessels has started taking a toll on shipping trade, with major lines announcing a surcharge on ocean freights.
Official sources in the shipping industry in Kochi told businessline that the surcharge varies from $1,500 for 20 ft containers and $3,000 for 40 ft containers to a minimum of $1,000 for 20 ft and $2,000 for 40 ft. With commercial ships in the Suez Canal coming under attack from the Houthi rebels, shipping lines have decided to re-route ships via Cape of Good Hope to reach Europe/US East Coast, which takes 20-plus days more.
The sources said the diversion could result in containers remaining stuck in transit, leading to shortage of boxes at all ports. This would further worsen the situation and lead to even higher ocean freight. Even if shippers are ready to pay higher rates, there is uncertainty over the routings and transhipments.
Prakash Iyer, chairman of Cochin Port Users Forum, said the situation has led to piling up of cargoes in various South Indian ports as well as at transhipment ports in Colombo. Most shipping lines have been forced to discontinue bookings for Mediterranean ports.
From Kochi, 33 per cent of the cargo goes to Europe and Mediterranean ports, and 12-15 per cent to the US East Coast, he said.
Mid-recovery turmoil
Shipping lines, which were recouping from the lost schedules and delays caused by the Covid pandemic, had seen rates falling to a low of $20 per tonne for trips from Cochin to Europe base ports and Mediterranean ports. However, the latest crisis in West Asia has once again put shipping lines and the exim trade in the dock, Iyer said.
Binu KS, president of Kerala Steamer Agents Association, said the immediate impact of the attack on merchant ships was ion vessel schedules, delivery lead time and shipping freight rates.
This, in turn, would hit the export sector, which is already in distress with poor demand, he said. The cascading effect would lead to an imbalance in equipment availability, further worsening the situation, he said.