Anil Taneja
Only 3 years ago the world faced a once in a lifetime pandemic which created all kinds of disruptions in daily life and severely affected the stone industry. Just when the problem of high shipping rates and shortage of containers ceased to be an issue and was largely forgotten by 2023, the conflict in the Red Sea has brought back the logistical problems in a brutal way and serves as a reminder that we live in an age of great uncertainty where any geo-political event can seriously disrupt any business anywhere.
Just consider the shipping rates of traffic between Asia and Europe in mid- February 2024, compared to what it was before the conflict between Israel and Hamas extended to the Red Sea due to the launching of missiles by the Houthis in Yemen on commercial vessels. The shipping lines have been forced to change the traffic route from the Red Sea taking the much longer one passing around Africa, lengthening the delivery period by about 3 weeks.
Even shipping costs from Far East Asia, from countries like Vietnam, China, Thailand, etc. to the USA have gone up considerably, sometimes tripled. And this is a case when this shipping route, in theory, should not be affected at all.
To give some examples of high the prices have risen, shipping rates for a 20 ft container from Mundra (India) to any Italian port used to be US$ 800 to 900 before, now they have tripled to around US$ 2600, sometimes approaching US$ 3000.
From India to USA, which, theoretically, should not be affected, the rates are now sometimes US$ 3700 when previously it was US$ 1400. And from India to Australia, in this case the Red Sea has nothing to do with the route, it is now US$ 1200 compared to US$ 500 to 600 a few months back.
From Mersen (Turkey) to China, frequently used for transporting marble blocks, the rates for a container have jumped from US$ 600 to more than US$ 2000.
Within the Mediterranean traffic, the shortage of containers is also being felt, and there too the rates have increased significantly.
The consequences for trade in the stone industry is becoming severe- buyers of blocks and slabs are sometimes asking their suppliers to hold back the orders, waiting for the situation to normalise. But this means many buyers of stone are running out of stock, or will soon do so.
Some Turkish companies are now thinking of bulk shipping of blocks to China and India to obtain some savings in transport cost. This would mean several companies getting together to coordinate shipping. But this also has its problems as other distortions are created in the market. Inventory tends to accumulate at the destination, creating price pressure for all.
The negative consequences go beyond raising the prices of natural stone at its destination. For exporters of blocks and semi-processed or processed stone, these distortions put severe pressure on the cash flows of companies. The vast majority of the trade between Asia and Europe países through the Red Sea. Delays also mean architects and designers will be even more reluctant to specify stone that comes from geographically distant places.
In projects that are ongoing, delays are inevitable.
With all the other problems the natural stone industry is facing, a serious disruption in trade that we are currently winessing will only worsen the prospects of the stone industry in 2024. Everyone is hoping this issue is resolved soon
Published on February 12, 2024
