Unrest in the Red Sea threatens Kochi’s tea trade as export logistical costs are expected to increase

The decision by shipping companies to suspend all trade through the Red Sea after Houthi rebels attacked cargo ships caused Kochi’s business to boom. Traders have pointed out that these alternative routes through the Cape of Good Hope would be longer and more expensive, and it is clear that exporters will have to bear the costs, which would encourage an increase in logistics costs and thus reduce their margins. However, an industry source in Kochi said tea shop purchases may increase soon due to expected delays  due to long travel time. 

“We expect  demand to be higher in the near term due to supply delays, which would benefit the business” 

   Too early

   President of the South Indian Tea Exporters Association, Dipak Shah, told Business Line that  rising freight costs are a major problem in managing the cargo that exporters have to take and can affect the purchase value of tea. As the US, Europe and other destinations have Christmas holidays, it is too early to comment on the effects of the developing situation and a clear picture will emerge only after the turn of the year. In addition, transit time will increase, which may make African teas more attractive to overseas buyers. Meanwhile, at the Kochi auctions in ’51, orthodox teas had a sales percentage of only 71 out of the 1,69,048 kilograms offered. The market for selected best and broken products was more expensive, while the rest were irregular and inferior. Exporters to CIS countries and West Asia were active. Meanwhile, the  absence of auctions next week due to next week’s Christmas holidays  boosted the CTC dust market with fine liquors dearer by ₹2-3 and sometimes more by ₹5-10, especially  in the popular Kerala market.  Average price realization increased by ₹ 4 to ₹136 from last week’s ₹132. The sales percentage was 92 out of the  8 lakh kg offered.

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