Rise of pirates in Red Sea to take toll on India’s exim business. Here are items that will turn costlier

livemint.com:

Rise of Somali Pirates: Soon after MV Ruen, a Malta-flagged merchant ship, was hijacked by pirates earlier this month in the Arabian Sea, there were concerns about the return of Somali pirates to international sea routes. Amid rising fears, Indian shipping regulator Director General of Shipping has advised seafarers to be cautious, according to a report by Business Standard. But the precautionary measures may not be easy on the pocket, say experts The alternative route adds 12-14 days of sailing time and a 30-40 per cent increase in freight costs, impacting prices.

Free on Board (FOB) exporters pass the burden to buyers, elevating landed prices. The piracy threat reshapes logistics, adding complexity and cost to international trade for Indian businesses. “For those exporting on a FOB basis, the higher freight will have to be borne by the buyer, thus increasing the landed price of the goods.

In both situations, the prices of products are likely to go up," said Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations (FIEO). The Red Sea is important for oil movement, and setbacks on such supplies or routing through a longer route of Africa are likely to hike energy prices, warned Sahai. Some maritime security sources told Reuters that their assessment was that the incident was the first hijacking of a merchant ship by Somali pirates since 2017.