InvestorQ : How does India plan to deal with the recent Suez Canal crisis wherein the container ship, Ever Given, has blocked the Suez Canal?
Sam Eswaran made post

How does India plan to deal with the recent Suez Canal crisis wherein the container ship, Ever Given, has blocked the Suez Canal?

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Moii Chavate answered.
8 months ago
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First a quick background. Just a few days back, a large 400-metre oil tanker go stuck horizontally and rank aground in the Suez Canal. Now, Suez Canal remains important because it connects the Mediterranean Sea with the Red Sea and offers the shortest route between Europe and Asia. Here is how India plans to address the issue.

Currently, the volume of trade that goes through the Suez Canal is around $200 billion, which is less than 10% of global trade. However, Suez Canal remains a key conduit to North America, Latin America and Europe. India‘s plan will broadly revolve around rerouting vessels, prioritizing cargo that is perishable, stabilizing the freight rates first and foremost and more efficient handling of the expected bunching-up at Indian ports. Here is the plan.

· Shipping lines have been typically advised to explore re-routing ships via the Cape of Good Hope, which is the Southern tip of Africa. This is likely add nearly 15 days to the cargo movement and the cost implications need to be worked out.

· Apart from the FIEO, other bodies that deal in perishable cargo like MPEDA and APEDA will jointly identify perishable cargo for priority movement. Then they will coordinate with the shipping lines for prioritizing the same in the most economical manner.

· The nodal body of shippers, CSLA, has given an assurance that it would honour the freight rates as per existing contracts. This is important to maintain stability in freight rates during the period of this crisis.

· The government is also preparing a back-up plan for bunching in key ports like JNPT, Mundra and Hazira in the post blockade scenario. Infrastructure and flows are being re-routed accordingly to manage the additional flows at ports.

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