Gujarat is facing challenges due to the prolonged closure of Gujarat Agro Limited’s (GAL) Cargo Complex and the Red Sea crisis. Increased logistic hurdles and soaring air cargo tariffs have burdened exporters with a 40% rise in shipment costs.
The GAL-run Air Cargo Complex, once a crucial channel for exporting about 1,500 MT of cargo per month including perishable items like agricultural products, pharmaceuticals and chemicals, was shut suddenly in June 2023.
Compliance issues and lack of approvals forced the complex to shut overnight, diverting export shipments to Mumbai or Delhi, adding to costs and turnaround times.
Additionally, the Red Sea crisis has disrupted global maritime trade, forcing exporters to turn to air cargo shipments. Gujarat, known for its extensive coastline, traditionally depended on sea routes for transportation and felt the repercussions of the crisis. However, the scarcity of air cargo services from Ahmedabad, combined with heightened demand, has led to a substantial increase in air cargo costs. This surge in expenses has impacted shipments to key destinations such as the US, Europe, and the Middle East.
With only 14 airlines offering cargo services from Ahmedabad, the constrained supply and heightened demand have led to a 40% hike in costs, according to a customs-clearing agent. The cost of air cargo to the US has skyrocketing from Rs 400 to Rs 700 per kg, with similar spikes observed in shipments to Europe and the Middle East. This surge in expenses, coupled with fluctuating freight rates and space availability, has plunged businesses into dwindling profit margins and logistical nightmares.
Small and medium enterprises (SMEs), especially, are struggling to cope with rising costs and complex logistics, impacting their profit margins and ability to maintain market competitiveness.
For exporters of perishable goods, the closure of the agro air cargo complex has exacerbated the situation, forcing them to seek alternative transportation methods or face delays in reaching international markets. This has resulted in decreased product quality, reduced market competitiveness, and lower export revenues, posing a significant challenge to industry players.
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