No sign of panic among Indian exporters; shift to Cape of Good Hope route

Despite Iran-Israel instability, exporters report no disruption in trade as 96 per cent of India's container traffic shifts to the Cape of Good Hope route

Amid uncertainties over the Iran-Israel ceasefire, Indian exporters remain largely relieved, indicating that most of their shipments remain unaffected so far. Nearly 96 per cent of India’s container traffic has already shifted to the Cape of Good Hope route.

 

From automobile majors like Bajaj to textile industry players, most sectors are now targeting the US, European, and African markets via this alternative route, amid the ongoing instability in West Asia. According to industry players, the minimal Indian cargo navigating through the Strait of Hormuz and Red Sea has not faced any disruption so far. 

“We have already started an increase in freight to Europe, Latin America, and Africa. There will be delays in shipping schedules, by around 10 days, due to re-routing through the Cape of Good Hope route,” said Rakesh Sharma, executive director, Bajaj Auto. However, automakers fear a possible rise in freight and insurance rates. 

Iran controls the northern side of the Strait of Hormuz, a passage which handles a good share of global trade. “Already 96 per cent of the container traffic is taking this route. We are not facing any issue at this point. The Cape of Good Hope takes some extra time. However, the freight rates are also down to Europe compared to what they were a year ago,” said Sunil Vaswani, Executive Director, Container Shipping Lines Association. 

While the shipments to Europe, the US, and Africa remain unaffected, the only concern for the Indian industry is the West Asia markets. “We are not facing any impact at all, as West Asia’s share of our exports is minuscule. For the three major consumers—the US, Europe, and the UK—we are taking the Cape of Good Hope already,” said Elangovan Viswanathan, president of the Buying Agents Association in the textile sector, and managing director of SNQS Internationals. 

To tap the West Asian market, the Indian industry is exploring alternate points like Fujairah port in the United Arab Emirates (UAE) on the Gulf of Oman and Salalah port in Oman.