Red Sea Crisis Pushes Up Dubai Freight Rates 10x, South India Tea Exporters Face Buyer Pushback

The Red Sea crisis and associated shipping surcharge have impacted Kochi's tea trade, prompting overseas buyers to request order postponements or cancellations due to high freight costs. International buyers are even pressing for cargo delivery at existing rates, excluding the shipping surcharge, posing challenges for local exporters amidst declining business orders. Freight rates to destinations like Dubai have surged over tenfold, reaching $250-300 per container. This situation is affecting tea exports from auction centers, as seen in a 74% drop in sales of orthodox leaves in sale 2.

Dipak Shah, Chairman of the South India Tea Exporters Association, notes disagreements between buyers and shippers regarding agreed-upon costs. While some accept higher freight costs, subdued market demand leads buyers to seek cheaper teas. Interestingly, the CTC leaf market in South India has experienced a surge in tea exports to Iraq, reaching nearly five million kg in the last two months. Despite some promising developments, geo-political uncertainties may impact the positive trend. On a broader scale, the CTC dust market in Kochi remains firm to dearer, with increased prices for liquoring teas and popular marks, driven by lower arrivals and a ₹2 rise in average price realization at ₹138.