War-hit Kerala exporters asked to pay 'surcharge' to get their products across

Foreign shipping companies have dropped a bombshell on exporters who have already been crippled by the war-induced shut down of transit points. An 'Emergency Freight Increase' (EFI) charge of 2000 to 5000 US dollar per container has been slapped on cargo that had departed even before the war began. The EFI charge will be imposed on cargo that had departed from ports since February 27.

"Due to the escalation of security risks in the Middle East region and the effective closure of the Strait of Hormuz, vessels are currently unable to safely transit the area," said a customer advisory issued on March 3 by Maersk, the world's second largest container shipping company. Majority of seaborne traffic between Kerala and GCC (Gulf Cooperation Council) ports passes through the Strait of Hormuz, a strategic maritime choke point pincered between Oman and Iran.

The EFI has been introduced as cover for this risk. "In order to safeguard cargo and maintain continuity of service, we have implemented contingency measures across the affected routes, including alternative routings and operational adjustments. As such it has been necessary to implement an Emergency Freight Increase to cover these constraints and increased operating costs," Maersk said in the advisory.

DP World, a Dubai-based logistics company that handles 10 per cent of global container traffic, also issued an advisory imposing what it called 'Emergency Surcharge'. This was kinder. This surcharge, unlike Maersk's, would apply only from March 3.

These 'war surcharges' apply to any booking/loading for shipments to/from Iraq, Bahrain, Kuwait, Yemen, Qatar, Oman, United Arab Emirates, Kingdom of Saudi Arabia, Jordan, Egypt, Djibouti, Sudan. This charge will be in addition to the freight applicable for containers already released, loaded, or already on water.

Kerala exporters are livid. "Some exporters have told me that they are not going to pay the surcharge. But then these companies will not release the cargo. The loss is ours, any which way you look at it," said Munshid Ali, the secretary of Kerala Exporters Forum. "No one has any control over foreign lines. Ideally, in times of such crisis, the Shipping Corporation of India should take over the cargo," Ali said

Already shipments of perishables like fruits and vegetables are held up in ports like Jebel Ali in Dubai. And perishables that were packaged for exports rot in Kerala's ports and airports. "It is upon exporters facing such crushing uncertainty that these fishing companies have imposed the surcharge," Ali said.

The war surcharge was anticipated, not its pirate heart. "While we understand the operational challenges faced by the carriers, the surcharges appear to be exploitative of the current crisis. Exporters, already struggling with global market uncertainties, cannot absorb such costs," an exporter said in an email to the KEF secretary.

Gulf Cooperation Council countries like Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE are the biggest importers of food items from Kerala. "Due to the arid climate, GCC states import a large volume of fresh fruits and vegetables because local production is limited," said George Philip of INMECC (Indo Gulf and Middle East Chamber of Commerce). "For Kerala’s fresh produce exporters (especially via Kochi, Kozhikode, Thiruvananthapuram airports), the Gulf markets — driven by demand from the large Malayali expatriate population — have historically been the top destination," he told Onmanorama.