Challenges Mount for Kolkata Port as Geopolitical Tensions and Freight Costs Disrupt Exports

The Kolkata port, a significant gateway to eastern India, is facing multiple challenges affecting its exports. Geopolitical tensions, a government-imposed rice export ban, and soaring ocean freight costs are contributing to a potential slowdown in trade activities. Major export items, including engineering goods, shrimp, and rice, have been impacted in recent weeks. Freight charges, especially for West Coast destinations, have surged by 30-50% since December 2023 due to the escalating conflict in the Red Sea. The rerouting of vessels around the Cape of Good Hope to avoid the Red Sea has caused significant delays of 14-20 days.

The increased freight costs, coupled with the recent ban on white and broken rice and a 20% export duty on parboiled rice, have disrupted cost structures and led to the temporary hold-up of several export consignments. The freight costs have soared to $400-500 per 20ft container and $600-700 for 40ft container shipments to the UK. The government's removal of nine million metric tonnes of grain from the international market since August has also impacted global prices.

Exporters are facing challenges with squeezed profit margins, administrative delays, and a reduction in export orders. Some exporters are withholding orders due to the unfavorable conditions. The ongoing crisis around the Red Sea shipping route is impacting short-term container shipping rates and jeopardizing adherence to Tariff Rate Quotas in Europe, potentially harming export opportunities. The Kolkata port authorities claim they haven't observed a substantial impact on export volumes yet, but industry experts express concerns about the varied impact of the crisis on different industries, with potential repercussions for the country's exports and imports.