Cargo Prioritisation to Freight Rates: Govt Formulates 4-point Plan to Deal with Suez Canal Blockage

The government on Friday said a four-point plan has been chalked out to deal with the situation arising from the blockage of Suez Canal. The plan was chalked out in a meeting convened by the logistics division, Ministry of Commerce. It includes prioritisation of cargo, freight rates, advisory to ports and re-routing of ships.

A meeting in this regard was chaired by Special Secretary (Logistics) Pawan Agarwal attended by representative from the Ministry of Ports, Shipping and Waterways, ADG Shipping, Container Shipping Lines Association (CSLA) and Federation of Indian Export Organisations. Under prioritisation of cargo, FIEO, MPEDA and APEDA will jointly identify cargo particularly perishable cargo for priority movement and work with the shipping lines for the same.

Besides, 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.

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.

Blockage of Suez Canal since March 23, 2021, is seriously hitting the global trade, the commerce ministry said. This route is used for Indian exports and imports worth USD 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.

”It is estimated that this backlog should take about a week’s time to clear out. It was decided in the meeting to closely monitor the situation,” the ministry said.

Read all the Latest News, Breaking News and Coronavirus News here