This move follows allegations of inflated costs for West Asia-bound containers, with concerns that high shipping expenses are making Indian exports unviable.
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India’s Directorate General of Shipping (DG Shipping) will issue an advisory to shipping lines, asking them to desist from predatory, non-transparent, and opportunistic pricing. The move follows exporters alleging excessive surcharges by shipping lines for West Asia bound containers. These concerns were flagged during a consultative meeting between multiple government arms and exporters.
“Exporters were informed an advisory to shipping lines will shortly be issued to address concerns of excessive surcharges,” a person present at the consultative meeting told ET.
The high shipping costs and uncertainty regarding container movement are making exports unviable. “Indian exports worth $ 8 –10 billion are affected by the West Asia disturbances,” a second person who attended the meeting said.
Global shipping lines have imposed hefty war risk surcharges, effectively increasing transport costs manifold. The most concerned are exporters who are being forced to pay higher costs for cargo which is already at sea and was loaded before a joint Israel-United States air strike assassinated Iran’s Ayatollah Ali Khamenei. Global insurance companies are also said to have withdrawn cover from ships in the Persian Gulf, citing higher risks.
Advisory and amendments
“This (DG Shipping) advisory is expected to act as a guidance since price regulations cannot be enforced on global shipping lines which carry most export cargo,” an industry representative said.Officials said new amendments to the Merchant Shipping Act are being readied which will act as a deterrent from such steps. “These (amendments) will protect domestic exporters from such arbitrariness,” a senior official said.
Shipping lines facing threats (after Iran retaliated) have been ‘dumping containers’ at transhipment hubs and not taking responsibility of ensuring they reach the intended destinations. The concerns will be deliberated by an inter-ministerial group tasked with finding solutions to this crisis, officials said.
Alternative routes and services
Global shipping lines have been avoiding the Strait of Hormuz and Suez Canal fearing attacks from Iran, and other non-state actors in West Asia. Indian flagged vessels have not been targeted, but they and their seafarers are stranded in the region.While most shipping lines are avoiding the region, DP World has offered a temporary contingency arrangement. Its customers now have the option to unload their import containers at alternative locations, specifically Khorfakkan Port or Fujairah Port outside the Strait of Hormuz.
The containers will then be moved further by road. Emirates Shipping Line too announced launch of a new India Gulf Red Sea Connector (IRC) service, connecting Nhava Sheva (Jawaharlal Nehru Port, Mumbai) to Khor Fakkan (Sharjah, United Arab Emirates).>
