The ripple effect of the Panama Canal and the Red Sea re-routings continue to impact the industry. India is largely dependent on the Red Sea route through the Suez Canal for its trade with Europe, North America, North Africa, and the Middle East. These regions accounted for about 50 percent of India’s exports and about 30 percent of imports, in 2023.

The fear of vessel attacks is so high that roughly 95% of cargo ships from India have been rerouted around the Cape of Good Hope. This consequently has increased shipping costs, added an estimated three additional weeks to the journey, and has made carrier schedule reliability out of India uncertain. Carriers are also only accepting on spot basis and not honoring named account (NAC) or contract rates. This problem could worsen as the Red Sea issues continue.

Recent vessel calls on the United States (U.S.) and Europe (EU) connections at Nhava Sheva and Mundra have been behind schedule—on average up to 12 days. Indian exporters are seeing equipment shortages at the ports of Nhava Sheva and Mundra. The container shortage is convoluting exporters’ ability to ship goods against orders already in hand—which risks losing new volume clients.

In Bangladesh, there is a similar theme of container shortages, on 40 foot and high-cube boxes which exporters mainly use. As well as an increase in import and export freight charges—reaching nearly 50%—due to Red Sea related disruptions.

In Sri Lanka, an estimated 800 container are stuck without clearance at Colombo Port causing a shortage for exporters to get goods shipped. The clearance process, which used to take two months under normal operations, is now taking four to five months to process.

New-lease containers are running out of stock—carriers need to reposition empty containers once cleared back to Asia and other manufacturing regions. With the trade routes being impacted, carriers are struggling to reposition empties for loading.

“As container availability dwindles, businesses in South Asia may experience delays in shipments, increased freight costs, and potential disruptions to the supply chain. Navigating these challenges will require a strategic and adaptive approach from stakeholders in the shipping sector to mitigate the potential economic repercussions in the coming months.”—Sabri Aminuddin, Route Development Manager, South Asia

Mohawk Global will continue to provide updates, as necessary. If you have questions, reach out to your Mohawk Global representative.

By Clarissa Chiclana

Share this article