Red Sea crisis: Freight costs rise for India Inc | Writer | Admin | |||
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The Red Sea crisis has started to have repercussions for India Inc, leading to higher freight costs on certain routes, and doubling of transit time of vessels. Container leasing rates for one of the major routes, Shanghai to Chennai, have witnessed 144% increase in Jan 2024 from $85 per unit in Nov 2023, the latest data from Container xChange, an online container logistics platform, showed.
The average increase in freight cost for trade from India to Europe and US across sectors, including pharma, automobiles and textiles, has been around 40-50% in Jan 2024 compared to Sept 2023, experts told TOI. Storage charges are reasonable in India, hence liners are preferring to use leased out boxes instead of moving their own containers, they pointed out.
Domestic companies use the Red Sea route through the Suez Canal to trade with Europe, North America and North Africa. These regions accounted for around 50% of India’s exports worth Rs 18 lakh crore, and 30% of imports valued at Rs 17 lakh crore last fiscal, according to Crisil Ratings.
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