Red Sea Crisis Disrupts Global Trade, India’s Exports Impacted

Red Sea Crisis Disrupts Global Trade, India’s Exports Impacted

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):

  1. What percentage of global maritime trade passes through the Suez Canal?
    • A) 10%
    • B) 15%
    • C) 20%
    • D) 25%
    • Answer: B) 15%
  2. 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
  3. 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
  4. 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
  5. 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