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Reading: Red Sea woes: Exporters seek increased credit as freight rates jump 300% 
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Red Sea woes: Exporters seek increased credit as freight rates jump 300% 

Team Happen Recently
Last updated: 2024/01/26 at 12:43 PM
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 Rising attacks forced shippers to consider the longer route 

 Indian exporters have asked the central government to help facilitate more credit as freight rates have jumped nearly 300 per cent due to the disruption in the Red Sea route forcing global shipping lines to take longer trade routes, which is ultimately affecting exports of low value items such as Basmati rice. 

  Increasing attacks on ships sailing in the Red Sea region since November 2023 have forced shippers to consider the alternative, longer route past the Cape of Good Hope, which has not only stretched delivery time by 15 to 20 days, but also increased the transit cost substantially because of incremental freight rates and insurance premium. 

  Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai told The Indian Express that freight costs have surged by 300 per cent as global shipping lines are taking the Cape of Good Hope route, which is why exporters have sought more credit to match the rising cost of shipments to Europe.

  Meanwhile, ratings agency Crisil on Thursday said that players operating in sectors such as agricultural commodities and marine foods could see a significant impact due to the perishable nature of their goods or lean margin profiles, which limit their ability to absorb the risks from rising freight cost. 

  “Not all sectors are expected to be impacted to the same extent. In fact, for agricultural  products  like Basmati rice (30-35% of production is shipped to these regions), exporters are feeling the pressure as rising  transportation costs have reduced exports.  exports and  part of their inventory is now  sold  on  the domestic  market.  leading to  censorship of achievements,”  the report said.  

 Indian companies use the Red Sea route  via  the Suez Canal to trade with Europe, North America, North  Africa  and parts of  West  Asia. Crisil said  these regions accounted for 50 per cent of  India’s  exports worth Rs 18  billion  and 30 per cent of  its  imports worth Rs 17  billion in the  last  financial year.  

 “Marine foods  – mainly  shrimp  – could also  be significantly impacted  as  80 to 90%  of  production is exported, more than half of  which via  the Red Sea.  The  perishable nature and  low  margins  leave  exporters vulnerable to rising  shipping costs  and competitive pressure from Latin American suppliers,” the report added.  The Indian Express had earlier reported that the  Ministry of Finance  is  scheduled  to hold a high-level meeting on February 5 to ensure smooth trade payments amid challenges  stemming  from  regional disruptions.  Red Sea  area.  

 For more  information,  visit at https://happenrecently.com/zepto/?amp=1

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