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After tea, it is the turn of India’s spices exports to bear the brunt of the Red Sea crisis. According to exporters, the impact on freight delivery would, in turn, affect raw material availability and other scheduled commitments.
“For high-value cargo like spices, the trade is reliant on a committed schedule and, because of the ongoing issues, we are unable to deliver the consignment to the customer on committed time,” said Gulshan John, Managing Director of Kochi-based Net Spices.
The inability to deliver consignments on time can lead to delays in production, manufacturing or distribution processes, which can step up costs for businesses in the form of storage and demurrage charges. This can disrupt the supply chain, causing shortages and production bottlenecks, he said, adding that the country’s spices exports stood at $4 billion last year.
Inward remittances delayed
John, who is also an executive committee member of the All India Spices Exporters Forum, said the trade reroutes via Cape of Good Hope are taking longer and pushing up the Cochin-Europe base port rates to $3,800 per 20ft containers and $4,500 per 40ft containers from $450-500 and $550-600, respectively.
The prolonged shipping schedule is affecting inward remittance commitments with banks, resulting in defaults. Besides, the trade is facing a severe shortage of containers, which is also pushing up freight charges. Air freight charges have also increased due to increased demand.
Exporters have long-term contracts with buyers. To fulfil commitments, suppliers are absorbing the increase in freight charges, resulting in losses. Demand for spices has risen and suppliers had stepped up operations despite the ongoing Russia-Ukraine war. But the Suez Canal crisis has worsened the situation, he said.
No worries over Gulf shipments
The cardamom trade is unaffected by the developments because it mainly focuses on Gulf countries and shipments to West Asia have remained undisturbed. Exporters are pinning hope on the upcoming Ramzan demand from Gulf nations in March.
A cardamom exporter in Vandanmedu, Idukki, told businessline that Guatemalan crop had made inroads in Gulf markets last year because of the higher prices of Indian cardamom. However, domestic prices are ruling steady this year (average $1,700 per kg) with a $3 price difference with the Guatemalan product, which promises to fetch good orders.
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