Department of Commerce chalks out plan to deal with Suez Canal blockage

Department of Commerce chalks out plan to deal with Suez Canal blockage

New Delhi, March 27, 2021

The Logistics Division of the Department of Commerce has chalked out a 4-point plan to deal with the situation arising from the blockage of the Suez Canal.

The plan was chalked out in a meeting on Friday chaired by Special Secretary (Logistics) Pawan Agarwal and attended by representatives from the Ministry of Ports, Shipping and Waterways, ADG Shipping, Container Shipping Lines Association (CSLA) and the Federation of Indian Export Organisations (FIEO), an official press release said.

The plan includes the prioritisation of cargo. FIEO, MPEDA and APEDA will jointly identify cargo, particularly perishable cargo, for priority movement with the involvement of the shipping lines.

The CSLA assured that the freight rates as per existing contracts will be honoured. A request has been made to the shipping lines to maintain stability in freight rates during the period of this crisis. It was noted that the situation is temporary and unlikely to have a long-lasting impact.

Once the blockage is over, it is expected that some bunching may take place, especially at the ports of JNPT, Mundra and Hazira. Ministry of Ports, Shipping and Waterways said it would issue an advisory to these ports to gear up arrangements and ensure efficient handling during the coming busy period.

Shipping lines were advised through CSLA to explore the option of re-routing of ships via the Cape of Good Hope. It was pointed that such re-routing usually takes 15 additional days.

Blockage of the Suez Canal since March 23 is seriously hitting the global trade. This route is used for Indian exports/imports worth $ 200 billion to and from North America, South America and Europe. It includes petroleum goods, organic chemicals, iron & steel, automobile, machinery, textiles & carpets, handicrafts including furniture, leather goods, and so on.

It was noted in the meeting that over 200 vessels are waiting on the North and South sides of the Suez Canal and about 60 vessels are getting added to the queue daily. If two more days are taken before the efforts result in clearance of the canal (digging on both sides, extra barges being added on every high tide, tugboats, etc. to straighten the stuck vessel), the total backlog created would be about 350 vessels.

It is estimated that this backlog should take about a week to clear out. It was decided in the meeting to closely monitor the situation, the release added.

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