India sketches out four-point plan to deal with Suez Canal crisis

In a meeting convened by the Logistics division of the Commerce Ministry, and attended by representatives of the Ministry of Ports, Shipping and Waterways, Directorate-General of Shipping, Container Shipping Lines Association (CSLA) and Federation of Indian Export Organisations (FIEO), a plan was mooted to deal with prioritisation of cargo, controlling of freight rates, re-routing of ships and issuing an advisory to ports.

The plan was felt to be badly needed since product tanker rates have almost doubled, while oil prices have risen by more than 4% over demand concerns, following a series of COVID-19 related lockdowns all over Europe.

It was noted in the meeting that over 200 vessels are queued up, awaiting passage through the canal; and 60 more are being added on a daily basis even after the canal is cleared, the backlog will take more than a week to clear out.

Under the plan to prioritise cargo, trade organisations like FIEO, Marine Products Export Development Authority (MPEDA) and Agricultural & Processed Foods Export Development Authority (APEDA) will identify cargo, particularly perishable commodities, for priority movement, and work with shipping lines for its movement.

An undertaking has been extracted from CSIA that freight rates as per existing contracts will be honoured, and no escalation will be charged from shippers.

The situation is temporary, and is unlikely to have a long-lasting impact, so there should be decorum observed in maintaining the freight rates,” said Pawan Agarwal, special secretary (Logistics), who presided over the meeting.

Once the blockage is over, there could be some bunching of vessels, especially at Jawaharlal Nehru port (JNPT), Mundra and Hazira. The Shipping Ministry has been asked to issue an advisory to the ports to gear up arrangements and ensure efficient handling during the forthcoming busy period.

Shipping lines were also advised through the CSLA to consider temporarily re-routing their ships via the Cape of Good Hope, although this route could take up to 15 additional days in transit.

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