Longer disruptions at Red Sea trade route may hurt auto, electronics production: GTRI

The Global Trade Research Initiative (GTRI) said companies relying on just-in-time manufacturing processes can be particularly vulnerable as they maintain low inventory levels and depend on the timely arrival of components and finished products.

Few industries where production will be impacted due to disruptions in global value chains include electronics, automotive, machinery, chemicals, pharmaceuticals, plastics, textiles, and consumer goods, it added.

“The adverse impact will multiply if the disruption continues beyond a few more weeks as it will impact not only trade but local productions of many industries, which rely on just-in-time procurement/import of inputs through the global value chains spanning both Europe and Asia,” GTRI co-founder Ajay Srivastava said.

Mumbai-based exporter SK Saraf said the time is right for India to consider building a big domestic shipping company, as, at present, “we are completely dependent on foreign shippers”.

The two main shipping routes from India to Europe are via Bab-el-Mandeb Strait, Suez Canal and Red Sea; and II-Via Cape of Good Hope, encircling Africa.The Red Sea route is shorter and faster, making it the preferred option for most shipping companies. It starts from major Indian ports like Mumbai, JNPT, or Chennai, heads westward through the Arabian Sea, enters the Red Sea, and navigates through the Suez Canal into the Mediterranean Sea.From there, ships can reach various European ports depending on their destination.

On the other hand, the Cape of Good Hope route is longer and slower than the Suez Canal route, but it avoids the potential for delays or disruptions.