The EXIM trade in Kochi is concerned over the closure of the Suez Canal after a huge ship ran aground on March 23, fearing that the situation may worsen the shortage of empty containers, surge in freight rates, besides missing the import shipping schedules of many lines.

Though reports say that the ill-fated ship blocking the canal was re-floated, it would take at least a couple of days before she can be moved out. The trading fraternity anticipate a possible backlog of cargo in various ports in Europe and the US East Coast that could hit the shipping schedules.

Fertiliser production of state-owned FACT also is likely to be impacted if the logjam prolongs. A ship laden with 10,000 tons of phosphoric acid from Morocco – destined for the Kerala based fertiliser PSU – was held up in the traffic snarl in the Suez Canal.

Also read: Suez blockage boosts Asia LNG price, but it probably shouldn’t: Russell

Phosphoric acid is a major raw material for the production of the company’s flagship product ‘Factamfos’ and the firm meet its phosphoric acid requirements partly by own production and partly by imports. It is learnt that the company is maintaining an annual Factamfos production level of over 8 lakh tonnes, which requires regular availability of external Phosphoric Acid.

“The situation is currently under control due to available stock coupled with the scaling down of production for annual maintenance. But if the situation continues for more than a week, the two shipments scheduled for April could be held up in the traffic snarl which would have an impact on fertiliser production,” a senior official with FACT told BusinessLine.

The major raw materials used by FACT for fertiliser production include ammonia, sulphur, sulphuric acid, rock phosphate etc. Of this, the company procure sulphur and ammonia mostly from Middle East, while rock phosphate and phosphoric acid shipments are sourced from Africa.

Also read: Tugs, dredgers still struggle to free ship blocking Suez Canal

Prakash Iyer, Chairman of the Cochin Port Users Forum said that the blockage in the Suez Canal is expected to continue for some more time as more than 200 ships are being stranded there. The berthing of all these vessels in respective ports is likely to result in congestion. This would result in piling up of containers at European ports and in turn, affect imports to Asia including India.

Alex Ninan, President of Seafood Exporters Association of India-Kerala region said they are concerned over the possible delay in delivery schedules especially to US and European markets, which may lead to cancellation of orders.

Already there has been a subdued demand in these markets including in Japan due to the second phase of Covid-19 lockdown, which would hit the business further. The possible delay at transshipment ports and reefer container shortage would further worsen the situation, as the sector in Kerala has already been reeling under raw material shortage which resulted in 40 per cent drop in sales, he added.

Source: thehindubusinessline