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India finalises four-pronged plan to deal with Suez blockade

The government, in consultation with the key stakeholders, has decided to "prioritise the movement of perishable cargo" and "honour the freight rates" as per the existing contracts.

March 26, 2021 / 09:12 PM IST
The stuck cargo ship has hit the global cargo movement through the Suez Canal (Image: AP)

The stuck cargo ship has hit the global cargo movement through the Suez Canal (Image: AP)

The Indian government on March 26 finalised a four-pronged plan to deal with the situation arising from the blockage of Suez Canal. This plan was chalked out in a meeting convened by the Logistics Division of the Department of Commerce on March 26.

Prioritising the movement of perishable cargo, honouring existing freight rates, rerouting of ships and remaining prepared for post-blockage rush at ports are part of the four-point strategy which the government will adopt in view of the Suez Canal blockage.

The meeting, where the plan was finalised, was attended by representatives of the Ministry of Ports, Shipping and Waterways, ADG Shipping, Container Shipping Lines Association (CSLA) and Federation of Indian Export Organisations (FIEO).

The Marine Products Export Development Authority (MPEDA), Agricultural and Processed Food Products Export Development Authority (APEDA) and FIEO "will jointly identify cargo, particularly perishable cargo, for priority movement and work with the shipping lines for the same," said the statement issued by the Indian government following the meeting.

CSLA assured that the "freight rates as per existing contracts" will be honoured, the statement added.

"A request has been made to the shipping lines to maintain stability in freight rates during the period of this crisis.  It was noted that the situation is temporary and is unlikely to have a long-lasting impact," it further stated.

The government has cautioned the ports operating in India to remain prepared to deal with the rush that is expected after the blockage in Suez Canal is over.

"Once the blockage is over, it is expected that some bunching may take place, especially at the ports of JNPT, Mundra and Hazira," it said.

"Ministry of Ports, Shipping and waterway assured to issue an advisory to these ports so as to gear up arrangements and ensure efficient handling during the forthcoming busy period," the statement added.

During the meeting, it was also decided to explore the option of changing the route adopted by some of the cargo ships in view of the blockage in the arterial Suez Canal.

"Shipping lines were advised through CSLA to explore the option of re-routing of ships via the Cape of Good Hope. It was pointed that such re-routing usually takes 15 additional days’ time," it said.

Blockage of Suez Canal since March 23, 2021 has severely hit the global trade. This route is used for Indian exports-imports worth US$ 200 billion to and from North America, South America and Europe.

The items of trade for India, through Suez Canal, includes petroleum goods, organic chemicals, iron and steel, automobile, machinery, textiles and carpets, handicrafts including furniture and leather goods.

"It was noted in the meeting that over 200 vessels are waiting on the North and South sides of the Suez Canal and about 60 vessels are getting added to the queue on a daily basis," the Indian government noted in its official release.

If two more days are taken before the efforts result in clearance of the canal (digging on both sides, extra barges being added on every high tide, tugboats, etc. to straighten the stuck vessel), the total backlog created would be about 350 vessels, it added.

"It is estimated that this backlog should take about a week’s time to clear out.  It was decided in the meeting to closely monitor the situation," the statement further said.

Moneycontrol News
first published: Mar 26, 2021 09:12 pm