Government plans special vessels to West Asia to ensure lower cost for exporters

The commerce department is working with agencies, including the Shipping Corporation of India (SCI), which was on the privatisation list until recently, to run special vessels to West Asia t o help exporters move their goods at cheaper rates.

While freight to West Asia is in the region of $3,000-3,500 per 20-feet equivalent (TEU) and $4,500-6,000 for refrigerated units, govt is eyeing rates, which could be nearly half that level to make it viable for Indian exporters. While the Strait of Hormuz remains inaccessible, vessels may dock at other ports, and from there goods may be shipped by roads, as is already being done for certain markets.

DGFT has held consultations on the issue and APEDA, which is tasked with farm exports, will lead cargo aggregation efforts, including identifying and roping in exporters, who want to avail themselves of the plan.

The move indicates that agricultural products — from perishables, such as onions, bananas and other fruits and vegetables — to rice and tea will be given a major push. Some of the fruit and vegetables exporters told TOI that for several markets in the region, freight rates are now higher than the cost of goods, making it unviable to ship.

Based on demand estimate, for refrigerated and non-refrigerated cargo, SCI will deploy vessels, along with route and frequency. There has been also some discussion on size of the vessel, with a 4,000 TEU merchant vessel being deployed or some smaller ones of, say, 1,000 TEU being chartered, at least initially. Concor will ensure the availability of containers, something which may face a shortage in the coming weeks, and also facilitate cargo movement up to the port.

The commerce department was looking at freight subsidy to help businesses tide over the problem, but this is seen as a more viable option, which is not only targeted at specific markets, but also will not violate global trade rules on subsidy. Some of the countries in the Gulf region are also looking at options to help cover some of the freight cost, especially for food items.
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