Over the past few months, global trade has been severely affected, primarily due to the disruption in one of the critical shipping routes through the Red Sea. According to the International Monetary Fund (IMF), attacks on vessels in the Red Sea region have reduced traffic through the Suez Canal through which about 15% of the global maritime trade volume passes.

The Suez Canal is the shortest maritime route between Asia and Europe and, therefore, the disruption has had a critical effect on exports from India, particularly from Gujarat, a manufacturing-heavy state.

Amid worries about delayed shipments because of the brewing Red Sea crisis, exporters were compelled to turn to air cargo despite higher costs. The crisis had a greater impact on exports of food products, textile, pharmaceuticals, and engineering goods.

Meeting the demands of buyers during Ramzan and Easter seasons has become a challenge for exporters, amid higher turnaround time.

Manufacturers of perishable goods, such as pharmaceuticals, have diverted shipments to air cargo. About 50% of the country's pharma industry revenues come from exports to the US and Europe. As almost two- thirds of Indian pharma exports take place through the sea route, costs are a key concern for pharma majors here. Non-perishable cargos like textile, auto parts and electronics, which are in demand due to the festive season in the Middle East and Europe, are also taking the air route.

Samir Mankad, the director of GSEC Aviation, which handles the Ahmedabad Air Cargo Complex (AACC), said, "In Oct 2023, the average daily air cargo volume stood at 80 metric tonnes (MT) at the Ahmedabad Air Cargo Complex. On a busy day, the unit used to handle about 100 MT. Today, it handles 200 MT every day." A Mumbai- based logistics company is facing a similar issue. Mahesh Fogla, the executive director of the company, said, "Typically, we handle 600 MT air cargo every month for exports to East Africa, Kuwait, Saudi Arabia, Dubai, and Muscat, among others. This has in- creased to 900 MT a month. Amid higher demand, air freight costs have also increased. For instance, an airline bound for Sudan used to charge Rs 320 per kg for garments. It now charges Rs 460. Air freight costs have gone up for all destinations." Mankad attributes the rise in cargo volumes to the inoperational Gujarat Agro-run cargo terminal, the closing of the fiscal year, and the Red Sea crisis.

"Across commodities, including pharma, textile,agriculture and medical devices, the cargo terminal haswitnessed an increase of 35% in volumes, which have been diverted from the sea route to the air route.Exporters are taking a hit because air cargo freight costs have also increased over the past three to five months,"Mankad said.

According to airline freight forwarders, the crisis has led to an increase in the cost of sea freight also because of a 15- 20% rise in insurance premiums. Freight forwarders said that warehouses are chock-a-block with cargo piling up in warehouses.