In the wake of escalating tensions in the Red Sea region, Kanpur’s exporters find themselves in a challenging predicament, withholding export consignments worth a staggering ₹100 crore. The ongoing Israel-Hamas conflict and the intensified attacks on cargo ships traversing the Red Sea have spurred a climate of apprehension, prompting significant disruptions in the export landscape.
Shipping companies, in response to the heightened risks, have adamantly refused to extend insurance cover for these consignments. As a consequence, exporters face a conundrum as alternative routes, notably through South Africa and Morocco, demand a staggering 35% increase in freight costs. This surge has not only inflated the expenses associated with exporting goods but has also substantially impacted the manufacturing costs of these items.
The situation has significantly unsettled the export community, raising poignant concerns regarding the safety and security of their consignments. Javed Iqbal, the regional chairman of the council for leather exports, expressed deep concern, highlighting that the industry had already been grappling with challenges due to the Russia-Ukraine conflict, only to be further compounded by the Red Sea turmoil.
“The fear of potential robbery or destruction of consignments along the Red Sea route has led exporters to withhold their shipments,” Iqbal remarked, encapsulating the prevailing sentiments among Kanpur’s export community.
Kanpur, known for its diverse exports spanning leather goods, ready-made garments, plastics, spices, and engineering tools, primarily caters to 27 European countries utilizing the Bab al Mandeb, a vital maritime passage connecting the Red Sea with the Gulf of Eden. This route’s strategic importance in international shipping renders the recent attacks by the Houthis on cargo ships a cause for significant alarm.
Imityaz Ahmed, engaged in the cargo business, shed light on the soaring freight costs, indicating a staggering increase from $700 to over $3000 per container, coupled with additional risk surcharges as high as $5200, thus further burdening exporters.
Sheezan Akhtar, a prominent exporter specializing in horse gear, emphasized the prevailing cautious approach among exporters, opting to retain consignments until the situation ameliorates. However, the current workaround of routing shipments through Morocco and South Africa, albeit lengthy and costly, has been the temporary recourse.
Alok Srivastava, the Convener of the Federation of Indian Export Organization (FIEO), underscored the gravity of the situation, citing the holding of consignments worth ₹100 crore and warning of a potential exacerbation in export disruptions if the situation remains unchanged.
The impact of this crisis on Kanpur’s exports has been palpable. Estimates from the Council for Leather Exports (CLE) reveal a decline in exports, with figures plummeting from ₹5500 crore to ₹4515 crore between April and September this year. The current deadlock in exports, attributable to the Red Sea turmoil, further threatens to erode the city’s export prowess.
The dire situation has prompted stakeholders to urgently engage the Union government, seeking remedial measures to mitigate the adversities faced by Kanpur’s export sector. As the impasse persists, the fate of these withheld consignments and the future of Kanpur’s exports hang precariously, awaiting a resolution to the crisis engulfing the Red Sea route.
Sources By Agencies
