West Asian missiles hurt Sri Lankan exports
Exporting to West Asia has become a big risk today with a war ravaging between Israel and Iran with fears of closure of all ports in the region and the Strait of Hormuz as some exporters say new shipments to Dubai and Iran have been withheld.
Sri Lanka’s key exports to Iran and the West Asian region comprise mainly tea and coconuts.
Already buyers in the region have indicated to exporters the possibility of closure of ports of West Asian nations.
According to information from the region, it has been stated that there is a possible closure of the Strait of Hormuz and in doing so a number of ports and countries will get affected. This is the location through which most of the world’s oil cargo is shipped.
Container ships will get completely blocked entering or leaving from Arabian Gulf. This is expected to render some ports to come to a complete standstill- all ports in UAE, Iraq, Qatar, Kuwait, Bahrain and the Port of Dammam in Saudi Arabia.
Tea shipments to other countries in the region like Turkey, UAE, Saudi Arabia, Iraq, Jordan and Libya among others are currently not yet suspended, the Sri Lanka Tea Exporters Association (TEA) stated in an emailed interview with The Sunday Times Business.
Since shipping lines suspended services to Iran some years back following sanctions imposed the sea cargo meant for Iran is normally shipped to neighbouring countries and then sent on feeder vessels to Iran.
Re-routing cargo bound for Iran has not yet arisen but it is one of the available options in case ports are closed, it was stated.
At present Sri Lanka is shipping teas to Iran on the tea-for-oil deal between the two countries whereby Colombo’s oil debt is being paid for with tea exports.
TEA stated that in this respect the exporters will follow the government instructions on suspension or continuation of tea shipments under the progrmame as this is a government-to-government arrangement.
So far there have been no cancellation of orders of Ceylon Tea to the region or to Iran, it was noted.
At present, there is no concern of any drop in tea exports right now for other countries in the region. If any exports to Iran get affected, volumes could come down in the short term but it is difficult to estimate the quantities at this moment, TEA said.
It was noted that tea being an essential beverage in West Asia and a popular drink of the masses, any impact on the exports would only be short term.
Costs on shipments to the region, however, are likely to increase as the insurance premium could go up and the war risk premium could be added, the TEA stated.
One of the key tea exporters to the region, Imperial Teas Managing Director Jayantha Karunaratne said that they already face a risk and if they continue exports then the risk will increase. Although exports may not stop completely however, some buyers have expressed concerns about possible closure of ports, he said.
He noted that with some buyers requesting to stop shipments to Dubai they will not be sending teas there. While there are teas already on route to Iran however, no new shipments have been considered for the moment.It was pointed out that companies will make their own call on shipments to the region and Iran. Sri Lanka sells around US$150 million worth of tea to Iran with Iraq leading in the region. Israeli bound teas are comparatively smaller in quantity at around $5-6 million.
Meanwhile, the coconut industry also faces challenges in exporting to the region due to the current situation. Sri Lanka’s coconut products shipped to West Asia comprise 30 per cent of all desiccated coconut exports.One of the leading exporters to the region told The Sunday Times Business on Thursday that the current West Asian tensions will have a big impact on coconut exports.
They noted that buyers will tell them to bear the risk till the shipments reaches the port and that is a concern for exporters as there is the possibility of delays or ports closing. And if the ports close then the orders will stop and the exporters will have to find other countries to ship the coconut products to.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!