Exports under threat as tensions mount in West Asia
Sri Lanka is set to face a direct threat to its exports and in particular Ceylon tea exports with the escalating tensions in West Asia following this week’s attack on a top Hamas political leader by Israel.
Tensions in West Asian region have intensified to levels that did not exist in the past and industry leaders point out there is a cause for concern as the cost of food is likely to rise and in this respect the business of tea remains under threat.
The cost of food and the business of tea are under threat, Asia Siyaka Commodities MD Anil Cooke told The Sunday Times Business on Thursday.
He explained that with 52 per cent of Ceylon tea exports headed for North Africa and West Asia the rising tensions in the region is set to impact on Sri Lankan exports.
Further it will create a more difficult situation since currently there are shipping delays from vessels arriving from China and this will send freight rates sky high again.
The current conditions in West Asia are not similar to what was experienced in the past since the wars that broke out previously did not cause disruption to merchant vessels nor did they come under direct attack by any parties unless they were caught in some crossfires, shipping industry experts said.
Today ports around the globe are experiencing berthing delays due to the excessive number of vessels moving around since China has increased its demand for weekly vessels to the US due to 90 per cent of merchant ships operating around the Cape of Good Hope in a bid to avoid the Red Sea route to avoid rebel attacks. On the backdrop of a future increase in tariff by the US on Chinese imports there has been a scramble for an increased number of goods being shipped out of China to the US at present.
This has led to large number of vessels plying this route and causing berthing delays from 2-3 days at the Singapore Port and about 3-4 days at the Colombo Port.
Sri Lankan exports will face a crunch on space as vessels bypass Colombo and this will lead to a higher demand for space giving rise to freight rates. Rates during the pre- Red Sea crisis which were at US$500-600 for the Colombo – Europe route have now risen to $3500-4000 and expectations are that this could rise further. This would mean increased costs for local teas and other exports.
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