Exporters suffer as Houthi attacks make vessel cover costlier

AHMEDABAD: Exporters in India are grappling with a surge in costs due to Houthi attacks on shipping in Red Sea, which has led to a sharp increase in cargo insurance premiums . Some products have seen increase as high as 500%, while the average insurance premium is now 60% higher.Reasons for increase is heightened risks in the region, prompting insurers to raise premiums for vessel insurance.Consequently, Indian exporters , particularly those in Gujarat dealing in chemicals, textiles, pharmaceuticals and engineering goods are experiencing a significant financial strain.Natu Patel, ex-president of Gujarat Chamber of Commerce and Industry (GCCI), said, "Exports have been affected by many issues relating to the Red Sea crisis . Apart from higher freight rates, some products have seen cargo insurance premiums rising six-fold."The effect on freight rates has been equally severe with costs to Europe almost tripling. Samir Shah, vice-chairman of GCCI international trade facilitation committee, said, "Exporters are struggling to find shipping options, even when willing to pay elevated charges. The availability of shipping slots has also reduced. Although air cargo presents an alternative, it comes with its own limitations, including reduced capacity for large volumes."Pathik Patwari, ex-president of GCCI, said, " Due to delayed transit time, payments are also delayed, creating working capital issues for MSMEs and exporters. There are also orders cancellations and problems with stock piling up."Ronak Shah, a custom house agent, said, "Exporters face increased waiting times because shipping lines are mostly avoiding Red Sea route. Vessels insurance premium have risen significantly, which ultimately affects the margins of exporters."