Red Sea Crisis: Impact on exports, increase in freight and insurance costs due to the 'roughness' of the Red Sea

HR Mandi Bhav: Red Sea Issue: The terror of Houthi rebels in the Red Sea is not stopping. Recently there was news that the ongoing problem in the Red Sea will not have any impact on India's maritime trade. But the truth is that due to increasing problems in the Red Sea, India's exports have started getting affected. 

Due to Houthi rebels, ships have to travel a long distance to reach America and Europe. An official said that the situation around the Bab-el-Mandeb Strait, an important waterway connecting the Red Sea and the Mediterranean Sea with the Indian Ocean, deteriorated due to the attacks by Houthi terrorists.

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He said that due to these attacks, ships are taking more than 14 days to leave the Cape of Good Hope. This is also affecting freight and insurance costs. 

The problems faced by the concerned stakeholders were discussed in a high level meeting in the Commerce Ministry. Traders, shipping units, container companies and other stakeholders were present in the meeting. 

The official said, 'They told us that freight cost has increased. They now have to travel a long distance and due to this the time has increased. It's been 14 more days.

Problems are being faced regarding exports.

Europe, the East Coast of America and Latin America are facing problems regarding exports. Due to the attacks, cargo ships have reduced traffic through the Red Sea. These ships are passing through the long route through the 'Cape of Good Hope' encircling the African continent. 

The official said, 'Due to the uncertainty of ships, the insurance cost has also increased. Some consignments have traveled a long distance. The government is sending security forces along with some ships.

Benefits of the Red Sea route:

The Red Sea route is very suitable for India as well as other countries. The trade route through the Bab-el-Mandeb Strait, the Suez Canal and the Red Sea is shorter and faster than the Cape of Good Hope route. For this reason it is preferred by cargo ships. This waterway is very important for the global economy. 

The Red Sea further meets the Suez Canal, connecting Europe and Asia through it. Due to the impact of the Red Sea waterways, shipping companies are having to travel long distances for business between Europe and Asia. Apart from taking more time, the insurance cost has also increased.