Global trade faces significant disruption due to incidents in the Red Sea region, particularly affecting the Suez Canal route, which handles 15% of global maritime trade.
Effect on Indian Exports
- Critical Route Disruption: India, especially Gujarat, heavily reliant on maritime trade, faces challenges due to disruption in the shortest route between Asia and Europe.
- Shift to Air Cargo: Exporters resort to air cargo despite higher costs due to delayed shipments caused by the crisis.
- Impact on Industries: Sectors like food products, textiles, pharmaceuticals, and engineering goods are particularly affected.
Challenges Faced by Exporters
- Seasonal Demand Challenges: Meeting the demands of buyers during peak seasons like Ramzan and Easter becomes challenging due to increased turnaround time.
- Pharma Industry Concerns: Manufacturers of perishable goods like pharmaceuticals divert shipments to air cargo, facing increased costs due to reliance on sea routes.
Increase in Air Cargo Volume and Costs
- Rise in Air Cargo Volume: Air cargo terminals witness a significant increase in daily volumes, attributed to various factors including the Red Sea crisis and operational issues in Gujarat.
- Cost Escalation: Air freight costs surge due to increased demand, with notable impacts on exports to destinations like East Africa, Middle East, and Europe.
Overall Impact on Trade
- Ripple Effects: The crisis not only affects air freight costs but also leads to a rise in sea freight costs and insurance premiums.
- Warehousing Issues: Warehouses experience congestion as cargo piles up due to disrupted transportation routes.
Multiple Choice Questions (MCQs):
- What percentage of global maritime trade passes through the Suez Canal?
- A) 10%
- B) 15%
- C) 20%
- D) 25%
- Answer: B) 15%
- Which Indian state is heavily impacted by the disruption in the Red Sea region?
- A) Maharashtra
- B) Gujarat
- C) Tamil Nadu
- D) Kerala
- Answer: B) Gujarat
- Which industries are particularly affected by the Red Sea crisis according to the passage?
- A) Oil and Gas
- B) Electronics
- C) Pharmaceuticals
- D) Construction
- Answer: C) Pharmaceuticals
- What challenges do exporters face during peak seasons like Ramzan and Easter?
- A) Increased demand
- B) Delayed shipments
- C) Higher insurance premiums
- D) Seasonal labor shortages
- Answer: B) Delayed shipments
- What is the reason behind the surge in air freight costs according to the passage?
- A) Decreased demand
- B) Operational issues in airports
- C) Increased demand and disrupted sea routes
- D) Government regulations
- Answer: C) Increased demand and disrupted sea routes