Pharmaceutical exports from India are facing a severe blow as tensions in the Red Sea and the Suez Canal lead to increased shipping surcharges. The Suez Canal blockage forces longer routes, causing delays and surges in costs. Major carriers have suspended operations, impacting crucial trade routes leading to product delivery delays and rising expenses for the pharmaceutical industry.
Pharma exporters rue that Indian pharma exports are likely to be badly hit with increase in additional surcharge in shipping lines due to tensions in the Red Sea and Suez Canal. The additional surcharge will be charged based on the rates prescribed by the respective shipping lines which will pose a big burden on the finances of the exporters.
With the Suez Canal becoming unusable, India’s exports of chemicals and pharmaceutical products are likely to be affected negatively.
Talking about the situation, Sandeep Modi, joint secretary, Federation of Pharmaceutical and Allied Products Merchant Exporters (FFPME) said, “Pharma exports to Europe, Central and Northern America are most likely to be vulnerable to high shipment costs and delays in deliveries.”
Freight lines are forced to avoid the Suez Canal and take a longer route around Africa to reach the West. The alternate route around the Cape of Good Hope could increase shipping time between Mundra and Rotterdam by a third apart from higher freight costs.
According to Mayuri Gupta, managing director, Indikos Forwarding Pvt Ltd, “The additional surcharge may range between USD 700 to USD 2,500 over and above the Freight charges based on the respective carrier. Besides this, compounding the problem further is the delay in deliveries with additional 15 to 20 days’ time as against the current timeline of 30 days which may pose a heavy financial burden and a threat to pharma trade.”
Indikos offers integrated logistics solutions for local, domestic and international Freight business across the air, sea and land. It also executes Projects’ Mobilization and Demobilization and acts as an agency for Import and Export.
Pharma consultant Sujoy Banerjee revealed, “The usual route from Mumbai to London through the Red Sea and the Suez Canal is 11, 600 kilometres (km). Due to the ongoing Israel Hamas war, the shipments are compelled to take the alternative route around Africa spanning a distance of 19, 800 km, creating a precarious and challenging situation for logistics. Sea freights on certain routes have already gone up more than two and half folds.”
Some of the major carriers like Maersk, MSC, Hapag Lloyd, CMA CGM, Zim, HMM have suspended their operations in the Red Sea region. Other lines are considering suspending their operations as well.
Hapag Lloyd has decided to avoid the Suez Canal and the Red Sea with immediate effect, and instead route their vessels around the Cape of Good Hope. They are reassessing the situation in the Red Sea regularly and will reinstate the services through the Suez Canal when the situation in the area is deemed safe and secure for the vessels, crews and cargo onboard.
HMM has instructed all HMM vessels in the area bound to pass through the Suez Canal, to reroute to the Cape of Good Hope.
The US along with a host of other countries is creating a new force to protect the vessels passing through the Red Sea. The UK, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain have joined the new maritime security mission. Some of these countries will conduct joint patrols while others provide intelligence support in the Southern Red Sea and Gulf of Aden.
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