India's small exporters reel as Red Sea crisis helps rivals nab business
Red Sea crisis that has jacked up his shipping costs and times.
«Last week, I lost a big order to a Polish competitor who does not need to pay increased freight rates,» said Jhunjhunwala, head of Binayak Hi Tech Engineering which ships about 700 containers of machinery tools, industrial castings, and railway shed materials per year.
Turkish exporters were also benefiting at the expense of Indian companies, he said, adding that he has also sent some orders on to buyers at a loss after absorbing increased costs.
«No one can afford to lose buyers with whom we have worked for over decades,» he said.
Missile and drone attacks in the Red Sea by Yemen's Houthi militants, who say they are acting in solidarity with Palestinians in the Gaza war, have forced many ocean freight firms to re-route vessels away from the Suez Canal to around the Cape of Good Hope on the southern tip of Africa.
The crisis has begun to upend global supply chains, with Chinese exporters also stumbling in pain. Many suppliers sign export deals on a cost, insurance and freight basis, making them responsible for any increases in freight and insurance costs.
In India, small exporters — who account for 40% of the country's annual merchandise exports worth some $450 billion — have warned that job losses have started and could soar if the attacks, which began late last year, become prolonged.
Even before the crisis, India's small exporters were operating at very thin profit margins — typically between 3% and 7%, according to industry estimates.
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