India devises 4-point plan to deal with Suez Canal blockage

By Team Newsable  |  First Published Mar 27, 2021, 1:52 PM IST

Blockage of the Suez Canal is seriously hitting the global trade, the ministry of commerce and industry said in a statement.


New Delhi: The Centre on Friday devised a four-point action plan to deal with Suez Canal blockage.

The decision comes amidst accelerated efforts to free the giant container ship that got stuck after it ran aground, following a sandstorm.

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This plan was chalked out in a meeting convened by the logistics division, department of commerce, government of India Friday. It includes prioritisation of cargo, freight rates, advisory to ports and re-routing of ships.

A 193-km canal, which is an artificial sea-level waterway in Egypt, connects the Mediterranean Sea to the Red Sea and provides the shortest sea link between Asia and Europe. The 224,000-tonne container ship was grounded in the Suez Canal on Tuesday morning, completely blocking the traffic along the waterway and delaying a number of ships carrying cargo ranging from oil to consumer goods.

Blockage of Suez Canal since March 23, 2021 is seriously hitting the global trade, the commerce ministry said.

Shipping rates for oil product tankers have nearly doubled, while oil prices rose more than 4% because of concerns around demand from fresh coronavirus lockdowns in Europe.

This route is used for Indian exports and imports worth $200 billion to/from North America, South America and Europe. It includes petroleum goods, organic chemicals, iron and steel, automobile, machinery, textiles and carpets, and handicrafts, including furniture and leather goods.

It was noted in the meeting that over 200 vessels are 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 (digging on both sides, extra barges being added on every high tide, tugboats, etc, to straighten the stuck vessel), the total backlog created would be about 350 vessels.

According to the plan, shipping lines have been advised through CSLA to explore re-routing ships via the Cape of Good Hope which may add 15 days. “FIEO, MPEDA and APEDA will jointly identify cargo, particularly perishable cargo, for priority movement and work with shipping lines for the same," the commerce ministry said in a statement.

At the meeting, CSLA assured it would honour the freight rates as per existing contracts. “A request has been made to 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 statement said.

The commerce ministry said once the blockage is over, it is expected that some bunching may take place, especially at the ports of JNPT, Mundra and Hazira. “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," it added.

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