The Red Sea crisis, created by Iran-backed Houthis movement’s missile and armed drones attack on Israel, has impacted the shipments of agricultural and vegetable goods since October  and has begun to affect the perishables industry, said Jitendra Srivastava, Chief Executive Officer (CEO), Triton Logistics and Maritime. 

The crisis has led to huge rise in costs as it takes a longer time to reach the destination and resulted in insurance rates skyrocketing. At least 12-13 per cent sea-bound trades are feeling the impact, said the CEO of Triton Logistics, an arm of the Abrao group of companies. 

The Houthi attacks have disrupted overall exports, he said, adding that mangoes are one of the commodities badly affected. The disruptions in the supply chain due to the Red Sea crisis has resulted in a lot of demand fluctuations, Srivastava said. 

Mango prospects

The size of the mango market grew significantly to $63-64 billion last fiscal and it will likely grow 6-7 per cent cumulatively to $68-69 billion this fiscal. In the case of India, there has been a nearly 20 per cent rise in demand looking at the current situation, the CEO of the company, which is a sort of one-stop solutions firm for its customers. 

Asked about the crop’s health given the prolonged dry period across the country due to El Nino, he said the damage has been limited. Such incidents have been occurring over the past few years and such fluctuations continue to recur. 

Only the Red Sea crisis is impacting shipments and there will be a cost escalation. “But that cannot be avoided looking at the current scenario,” he said. 

Srivastava said the upcoming India-EU free trade agreement (FTA) will influence commodity prices. The FTA will help reduce tariff and make Indian goods a bit more competitive in the European markets.

Protective measures

Goods such as textiles, spices or pharma products will become cheaper benefiting medium enterprises. Dairy, coal and agricultural products have been excluded and will not enjoy any duty benefit, he said. 

On the other hand, a 1 per cent cut in bound rates will not help commodities and will not have any major impact. However, the Indo-EU FTA will benefit some of the sectors, said the Triton CEO.

On the EU coming up with protective measures for rice millers, he said each country will have in place checks and balances as they need to protect local interest. 

On the Indo-UK FTA, he said it will likely be on the lines of what it would be with the EU. Again, the same goods that will become cheaper in the FTA with the EU, will be cheaper in this case too and benefit medium enterprises.

The FTAs will provide a lot of opportunities to organisations to enhance their competitiveness and price difference between India and Europe could influence the import-export dynamics, Srivastava said.  Potentially, it could favour imports of cheaper substitutes of domestic products that are costly. 

Coming out of woods

On the challenges in the logistics sector, he said there are areas where limitations come into play and still there are a lot of bureaucratic hurdles. There are certain things that can be speeded up to overcome challenges, he said, adding that delay will impact delivery of commodities on time, leading to supply chain disruptions. 

However, the Government was helping with the infrastructure part of logistics, though it could make it easier working on procedural aspects to avoid delays. 

Post-Covid the logistics sector has come out of the woods. But the supply chain issues keep cropping up now and then with the latest being the Red Sea crisis. “Logistics is one sector which always is having some challenge or the other. That’s the beauty of the logistics or supply chain industry which keeps reinventing itself.  The Red Sea crisis happened when shipping lines were settling down post-Covid. This is not the first time and this is not the last time that it will happen,” said Srivastava. 

On its part, Triton is trying to overcome all these challenges thrown from different geopolitical tensions, including the Ukraine war, the company’s CEO said.