Exporters face huge losses due to European volcanic ash

Already exporters are not able to draw enough demand for goods from the key export markets due to the massive financial slowdown, which has hurt many big economies adversely in the last one year.

Online PR News – 21-April-2010 – – Already exporters are not able to draw enough demand for goods from the key export markets due to the massive financial slowdown, which has hurt many big economies adversely in the last one year. In addition, the unprecedented four-day shutdown of European airspace continued to wreak havoc, as the volcano near the Eyjafjallajoekull glacier in southern Iceland went on spewing ash and many countries have either canceled, delayed or extended bans on flights.

And, this has undoubtedly made Indian exporters feel jittery about the huge loss they (exporters) would be witnessing in the next few days. Underscoring views in this context, S.P.Agarwal, President of Delhi Exporters Association (DAE) commented that the situation has added "fuel to the fire." And, the exporters are going to witness a loss of Rs. 1000 crore from all over the country.

"It is a hard time for exporters once again after the incident at ICD Tughlakabad which made exporters to suffer with huge losses due to the massive fire which broke out," Agarwal said.

Explaining further, he mentioned that the Indian exports had starting recovering slightly after the impact of the worst global slowdown, but during the airport strike in Europe which took place some days back was an added disadvantage for the exporters as quantum of goods got accommodated which resulted in the congestion of air cargo.

He added, "During this period, airlines are quoting 50 percent higher price for cargo. Like, if they (airline) were charging fair Rs. 200 a kilo, they have started charging at around Rs.300 to 400 a kilo, which is costlier for the exporters. They were blackmailing the exporters by charging more. Moreover, the cargo did not get exported to the destination."

Moreover, the cloud of volcanic ash has made things worst for the exporters as the entire movement of export goods have got stranded, he said.

He pointed out that around 1500 shipping bills are passed for export shipments from all over the country via air. However, around 10,000 export shipments bills are filed every day and the amount for five days becomes 50,000 from all across the country.

At present, there is no sign when the ash clouds will clear and everything is at halt. Moreover, buyers are expected to cancel orders if the situation prolongs and the exporters can likely witness great financial crisis with the strand of shipments, delay and undelivered goods, Agarwal mentioned.

The chairman of the Indian Silk Promotion Export Promotion Council, Subhash Mittal is also expecting 10-15 percent slowdown in business, if the situation continues for another couple of days.

He said that if the the air travel crisis continues for more time, Indian exporters can witness cancellation of orders from the buyers, as they (buyers) will not appreciate to stay in an indefinite circumstances, which might hit Indian exports in future.

Agarwal expects that these losses will take another one month to get over, as these type of situations make huge financial losses for the exporters.

The Federation of Indian Export Organizations (FIEO) expects that worth $1 billion high-end merchandise exports from India are probably be affected due to the air travel crisis.

It quoted that exports worth $10 billion are shipped annually by air via European air routes and consignments worth $1 billion is exported monthly to EU. If the situation prolongs then exporters will be hit in a big way making things worse for them.

Mittal said that many airlines have already increased their freight charges, which has become hassle for Indian exporters as of now. Few airlines are demanding exorbitant freight charges. Stating this he said, "Freight costs have almost doubled for America and Europe. They are charging express rate, normal rate and some are also charging the basic rate, etc. However, middle east is not charging the express rate. But the backlog is too much at present."

"As consignments have been stranded, there is massive delay in the delivery process. Buyers are co-operating, but the chances are more for canceling the shipments or they (buyers) may request for discounts. We are going to witness a huge loss, if the situation continues," he added.

In fact, airports of all sizes in Ireland, the UK, Belgium, the Netherlands, Norway, Sweden, Denmark, Estonia, Latvia, Finland and parts of France, Germany and Poland have been directly affected.

According to the statement of the Airports Council International (ACI) Europe, around 63000 flights have been canceled so far along with 313 airports have been paralyzed and the situation is worst the 9/11.

Moreover, many Indian airlines such a Kingfisher, Air India, Jet Airways including all others have canceled their flights and also some have extended the delay for days ahead.