New Delhi: The Union Commerce Ministry observed that the blockage of Suez Canal by the cargo ship Ever Given has affected the global trade.
After taking stock of the situation arising out of the massive blockade in the Suez Canal, the ministry issued a statement saying ‘the global trade has been seriously hit’.
As per an estimate, the route is used for Indian exports and imports worth USD 200 billion (around Rs 14 lakh crore) to/from North America, South America and Europe.
According to officials, India uses this waterway for import or export of petroleum goods, organic chemicals, iron and steel, automobile, machinery, textiles and carpets, furniture and leather goods and handicrafts.
The Ever Given, a Panama-flagged ship that carries cargo between Asia and Europe, ran aground Tuesday in the narrow canal that connects the Mediterranean Sea to the Red Sea.
The massive vessel got stuck sideways in a single-lane stretch of the canal, about six kilometres (3.7 miles) north of the southern entrance, near the city of Suez.
The blockade has sent ripples through global trade as the canal accounts for around 30 per cent of the global shipping container volume.
Read More: Govt extends validity of driving licence, vehicle documents till June
According to an estimate, over 200 vessels are already 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.
If two more days are taken before the efforts result in clearance of the canal, the total backlog created would be about 350 vessels.
A study by German insurer Allianz estimated that the blockage could cost global trade USD 6 billion to USD 10 billion a week.
Meanwhile, the ministry has estimated that this backlog will take about a week's time to clear out.
Govt readies 4-point plan to deal with blockage
In the meeting chaired by Special Secretary (Logistics) Pawan Agarwal and attended by representative from the Ministry of Ports, Shipping and Waterways, ADG Shipping, Container Shipping Lines Association (CSLA) and Federation of Indian Export Organisations (FIEO), a four-point action plan was discussed.
It includes freight rates, prioritisation of cargo, advisory to ports and re-routing of ships.
During the meeting the CSLA assured that the freight rates as per existing contracts will be honoured.
"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," the commerce ministry stated.
Under prioritisation of cargo, FIEO, The Marine Products Export Development Authority (MPEDA) and the Agricultural and Processed Food Products Export Development Authority (APEDA) will jointly identify cargo particularly perishable cargo for priority movement and work with the shipping lines for the same.
Read More: New tax rules on PF deposits benefit some, disappoint others
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 Waterways 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 said.
Besides, 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.
(With PTI Inputs)
