The recent closure of the Hormuz shipping route has led to a significant surge in demand for Middle East landbridge solutions, resulting in a four-to-five-fold increase in trucking rates from Jeddah to the UAE. This development is likely to impact Indian agri-exports, particularly for products such as basmati rice, spices, and pulses, which are widely exported to countries in the Gulf Cooperation Council (GCC).
As the summer season approaches, Indian exporters typically experience an increase in demand for their products in the Middle East region. However, with the current constraints on shipping, the reliance on overland routes is expected to escalate. According to sources cited by The Loadstar, trucking rates have skyrocketed due to the massive demand, which exceeds supply by four-to-five times. This increase in logistics costs may be absorbed by exporters, importers, or consumers, depending on the agreements in place.
The Indian agri-export industry, which exports a significant quantity of products such as turmeric, cumin, and coriander to the Middle East, may need to reassess their supply chain strategies. The western ports of India, including Jawaharlal Nehru Port (JNP) and Mundra Port, typically handle a large volume of exports to the GCC countries. However, with the closure of the Hormuz route, exporters may need to explore alternative routes, such as the overland route through Pakistan or Iran, which could add to the overall cost and transit time.
In terms of specific products, Indian exports of basmati rice to the UAE, Saudi Arabia, and other GCC countries may be affected. India exported over 4.5 million tons of basmati rice in the financial year 2022-23, with a significant portion going to the Middle East. The increase in logistics costs due to the landbridge solution may impact the competitiveness of Indian basmati rice in these markets.
To navigate this challenging situation, Indian exporters can explore options such as renegotiating contracts, looking for alternative routes, or diversifying their product portfolio. They can also leverage online platforms, such as the Indian Customs Electronic Commerce gateway (https://www.icegate.gov.in/), to stay updated on the latest trade regulations and logistics developments.
As the situation continues to evolve, Indian agri-exporters will need to remain agile and responsive to changes in the market. By staying informed about the latest developments and exploring alternative solutions, they can minimize the impact of the increased landbridge costs and continue to maintain their competitiveness in the global market. VoyagerExim, an exporter of spices, rice, pulses, and other agri-products from Hyderabad, will likely be closely monitoring the situation to ensure that their exports to 16+ countries are not disrupted.