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AFTERMATH OF SUEZ CANAL CRISIS FOR INDIA


The Taiwan-run but Panama flagged MV EVER GIVEN, a 400m long and 59m wide vessel, which was stranded in Egypt’s Suez Canal for six days was finally refloated on Monday. The blockage had already hit world oil markets, with crude oil prices surging 6%, with more than 100 ships stuck on either side. The blockage of the Suez Canal, which connects Asia to Europe, has potentially caused serious consequences on international trade and commerce. Any blockage of the Suez Canal means all ships between Europe and Asia must circumnavigate the Cape of Good Hope in South Africa.

India is the top importer of crude oil and two-thirds of India’s crude oil coming from the gulf regions via the Suez Canal. India may majorly face losses due to its import-export of ethane with the USA and imports of crude oil from Latin America. India stands sixth among exporters of crude oil after countries like Russia, Saudi Arabia, Libya, etc. India’s shipments of oil, textiles, furniture, cotton, auto components, and machine parts to Europe, North America and South America could get delayed by 10-15 days. Sanjay Bhatia, Co-Founder of freight forwarding agency Freightwalla, told Construction World, “While exports won't be affected much in March, the impact may get considerably evident by May-June as we will have to wait and see how shipping lines respond to this challenge. Right now it is a very fluid.. situation, however, the knock-on effects of this could be quite sizable, similar to how we are still dealing with the after-effects of the pandemic lockdowns.”


Even if the already efficient Suez Canal operates at 100% efficiency, the backlog that the vessel has created itself will take a substantial amount of time to clear, and “the domino effect is expected to sustain for the medium term,” Bhatia said. Because of the week-long jam in the canal, an imbalance may be created in the demand-supply chain, escalating freight rates for vessels.


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