INDIAN EXPORTERS ARE yet to see any order cancellations or demand to renegotiate contracts as a result of the Red Sea disruptions, but are increasingly worried that any inordinate delay in the resolution of the crisis may seriously jeopardise the business.
Textiles and apparel exporters have already started witnessing an increase in transit time in some cases, and a rise in freight, but still have the buyers' confidence intact. In most cases, it is the buyer who pays for transport, sources from the exporting community say.
Sensing delays, some of the buyers are opting to take cargo by air, especially of seasonal fashion items because any delay will mean missed sales, Jyoti Apparels managing director and former Apparel Export Promotion Council chairman HKL Magu said. Some buyers from the US, Canada and Mexico have opted to take delivery by air.
According to exporters, the use of longer routes, via Cape of Good Hope in Africa to avoid the Red Sea and Suez Canal, will add 14 days to the travel time and higher freight. Rates to Europe and the US for a 20-feet container have increased by an average of $1,500 from $500 since the crisis erupted,Corona Steel Industries managing director Arun Kumar Garodia said. The freight rates, however, are still nowhere near what they were during the Covid-19 peakwhen a 40-feet container to the US was hired for $18,000 to $20,000,Arvind Footwear CEO RK Jalan said.
The peak of shipping rates was in September 2021. Since then, they have been in retreat till the merchant shipping came under fire.
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