The Tyre Industry in India is experiencing disruptions in transit times and freight rates due to the Red Sea incident, affecting both tyre exports and the import of raw materials.
Rajiv Budhraja, Director General of the Automotive Tyre Manufacturers’ Association (ATMA), revealed that freight rates from India to Rotterdam have increased 3-4 times, with transit times extending by 14 days due to ship diversions through the Cape of Good Hope.
In the context of India-US shipping, Budhraja noted that there is no noticeable impact on transit times to the West coast, but there is an 8-10 day increase in transit times to the East coast. Freight rates have doubled to the West coast, and there is a 40% surge to the East coast. While container availability has been somewhat affected, operations have not been disrupted significantly.
The Red Sea serves as a crucial channel for shipping goods to the US East Coast, Europe, West Asia, East Asia, and Africa from India. Rajiv Tharian, associated with Southland Rubber Group, a major processor and importer of natural rubber to the Indian market, reported a substantial increase in freight rates from Asia to Europe (300%), Asia to the US (200%), and other routes like Africa to Asia (100%).
Additionally, there is a severe shortage of containers, leading to extended circulation times and significant delays in planned shipments from various locations. This situation has prompted many tyre companies, particularly in the US and Europe, to aggressively procure nearby shipments and increase buffer stocks of raw materials, including natural rubber, to mitigate the risk of shipping delays in the upcoming weeks and months.
This increased demand has further strained the natural rubber supply chain, which was already under pressure due to lower-than-normal production in recent months from the top three producing nations—Thailand, Indonesia, and Vietnam. The peak production season for natural rubber is from November to February, after which many countries enter a wintering or low production season.
On a different note, George Valy, president of the Indian Rubber Dealers Federation, mentioned that despite the Red Sea crisis, domestic procurement by the industry remains unaffected, even though there is tight availability toward the end of the production season. Natural rubber prices have increased by ₹6 per kg, reaching ₹160 per kg, primarily due to lower availability. The crisis has also caused delays in rubber imports.