Exporters of fruits and vegetables are locked in a dispute with shipping lines over war-risk surcharges carriers want to levy even to cargo already loaded or at sea before the charges were announced, triggering a scramble for government intervention.
The issue has led to marathon meetings between exporters, the commerce ministry, and other central government authorities, with industry groups seeking relief from what they termed as “arbitrary charges”. While some exporters are considering arbitration, others are looking to negotiate with shipping lines directly.
Exporters of perishable goods face the toughest option as bringing shipments back could mean heavy losses if the cargo gets spoiled, while paying the new charges can wipe out margins.
“Many small exporters are staring at bankruptcy due to an increase of 10-20 times in shipping charges, the war surcharge, and every expense arising from the disturbance of the shipping routes which the shipping lines have asked the exporters to bear,” said an industry official.
Exporters, who may be forced to sell their quality produce at less than half of the procurement cost after bearing expenses arising from shipping-related challenges, are also worried about mounting losses.
At a meeting with the Agricultural and Processed Food Export Development Authority (APEDA), exporters of grapes, bananas, pomegranates, and other fresh fruits and vegetables urged the Centre to intervene with shipping lines to regulate undue profiteering, similar to steps taken to control airline fares during the IndiGo crisis last year.
“The price of export-quality grapes had almost doubled compared with last year as production had been affected due to prolonged rainfall,” said Azhar Tambuwala, executive director at Sahyadri Farms Post Harvest Care. Exporters of perishable fruits and vegetables said port authorities and shipping lines are trying to profit at their cost and also claim to be facing malpractice while attempting to change the destination of goods that can’t be delivered to the war-affected regions in West Asia.
Insurance companies have also stopped extending cover for some exports, adding another layer of risk.
Shipping charges, about $300 per container earlier, have surged more than 20 times amid the crisis. The war-risk surcharge alone has risen from about $2,000-$4,000 per container to around $7,000 as of Friday, exporters said.
“The carrier shall not be liable for any loss, delay, or non-performance arising from Force Majeure conditions,” a shipping line wrote to a customer in Maharashtra. For vessels returning to Nhava Sheva port, the company said the “carrier and its agents bear no responsibility for any storage, plug-in, or other port-related charges which will incur.”
Exporters say containers destined for Saudi Arabia have been unloaded at Sohar in Oman, while shipments meant for Syria have been diverted to Sri Lanka. After unloading them at locations other than the final destination, the shipping lines have taken no further responsibility, exporters said.
“We have no contact with the shipping line officials at the new destination,” said an exporter.
