Agri Business

Russia-Ukraine conflict begins hitting tea shipments from Kochi auctions 

V.Sajeev Kumar | | Updated on: Mar 04, 2022

Shipping lines’ decision to suspend operations forces exporters to postpone or cancel orders

Tea exporters at the Kochi auction centre have begun facing problems due to the Russia-Ukraine conflict as major shipping lines stopped shipments to the war-hit region.

A leading tea buyer at the centre told BusinessLine that the recent announcement by shipping lines such as Maersk, MSC, Hapag -Lloyd, CMA to suspend operations to Russia and Ukraine have made exporters either to cancel or to postpone their consignment orders. The decision to postpone tea shipments comes on the heels of the directive from overseas buyers in view of the uncertainties in these markets coupled with the delay in getting payments for the earlier orders. Due to payment defaults, banks are also unwilling to extend credit for future shipments as well.

These exporters from Kochi auction centre together ship around 100 tonnes of tea — especially orthodox grades — to countries such as Russia, Ukraine, Kazakhstan, and Georgia every month, he said.

Largest importer

Russia is the largest importer of Indian tea accounting for 17-18 per cent of the total volume.

Deepak Shah, Chairman of South India Tea Exporters Association, said uncertainties on shipments to Russia and Ukraine is creating a lot of problems for shippers in view of the inability expressed by shipping lines to deliver the cargo to war-hit or country facing sanctions. Whether these cargoes have reached the destination or offloaded in some other transit ports or the possibility of returning these cargoes back to the port of origin are some of the challenges being faced by the exporters’ community. Since tea imports are not permitted in India, the sector is anticipating some obstacles in unloading the tea that might come back to Indian ports, he said.

Besides, banks are also refusing to accept all export-related documents to Russia and making payments and this has led to a pause in getting credit to future shipments as well. Seeking the intervention of the PMO, shippers are compiling exports data to continue shipments and resolve the crisis especially when the sector is recouping itself from the impact of Covid that led to a subdued demand across the markets, Shah said.  

Russia and CIS countries together import 40 million kg of tea annually from India and of this, the share of South Indian teas was close to 20 million kg, he added.  

Published on March 04, 2022
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