Karnataka businesses sinking due to Red Sea crisis
BENGALURU: The restriction of ships along the Red Sea due to attacks by Yemen’s Houthi Movement has made certain industries and allied ventures in Karnataka take a massive beating in the last two months. Specific raw materials for electronic components purchased from Europe and steel bought from Asian countries which in turn depended on shipping of raw material via the Red Sea have suffered. Fruit Pulp exports from South India have crashed due to non-availability of containers.
The Iran-backed rebel group’s objective is to target ships that are owned or operated by Israel but they have targeted ships of different countries forcing many shipping concerns globally to stop operations. Freight rates have shot up in the ships that operate raising costs for manufacturers and the end customers.
Vice President of Federation of Karnataka Chambers of Commerce and Industry (FKCCI) and Managing Director of the City-based Hitech Magnetics and Electronics Pvt Ltd, Uma Reddy told TNIE, “The restriction of passage via the Red Sea has impacted Karnataka for sure. For instance, for my firm we import soft iron and ferro alloys from Italy and Netherlands in large quantities. Since it is iron, it is quite heavy. The consignment is at the port and not even loaded onto the container. Last month, I was forced to bring my consignment by air and it was quite pricey due to the weight. Taking a longer route via Southern Africa will also shoot up freight costs.” This raw material is crucial for electricial applicances and this is a tough time for us.”
Santhosh Reddy of Canara Hydraulics Pvt Ltd, also Bengaluru-based, which manufactures hydraulic cylinders says, “I import steel from Taiwan and China for my concern. This is up to 100 tonnes a month. Those countries are not able to get their raw material from European countries. This has severely impacted my supply chain for the last 1.5 months.”
Shiva Shanmugam, past president of FKCCI, says his firm supplies containers across South India to Fruit Pulp Manufacturers. “The pulp of mango, banana and papaya are in great demand around the world over and these are massive 20-tonne, 40 tonnes and 50-tonne steel containers which are tightly sealed ones as they are transported via water. Due to the stoppage of ships, many containers are stuck at different ports en route. International firms are very strict about deadlines and levy huge penalties and no excuse is accepted, he added.
He added that his extended family in the garment business in Davangere and different parts of Tamil Nadu too were impacted a lot. “The world depends on textiles sent from South India. Due to the Red Sea crisis, the exports are getting delayed,” he said.