Perishable items exporters threaten strike

Our Commodities Bureau

Mumbai, Oct 15: Exporters of perishable products have threatened to go on strike from October 17 to protest against the recent increase in air freight rates by airline companies.

Exporters of perishable goods in Kozhikode and Thiruvanthapuram are said to have suspended their operations from Monday morning.

Following the September 11 terrorist attacks on the United States, nearly all airlines have increased their air freight rates uniformly, ranging from Rs 5-7 per kg across the board for all routes. This increase in airfreight rates amounts to normally 5-25 per cent of FOB value of perishable exports, making Indian perishable items more expensive.

Says chairman of Federation of Indian Export Organisations (FIEO), G K Gupta, “The hike in air freight rates will not affect exporters of value-added products like garments, but it will play havoc for perishable goods exports, as prices will shoot up making the goods highly uneconomical for buyers.”

From Mumbai airport alone, around 45,000 tonne of perishable items are exported every year. The latest increase of insurance charges by airline companies at Rs 5 per kg will amount to an additional burden of whopping Rs 22 crore on exporters.

Although, airlines are attributing the justification of this move to the hike in the insurance charges payable by them, FIEO is not convinced. Says deputy director of FIEO, SK Saraf, “If the increase in insurance premium is considered, then it roughly works out to about 50 ps per kg and, therefore, the increase in air freight rates by Rs 5-7 is unjustified”.

Mr Saraf further says, “The hike in insurance premium by insurance companies is unjustified as they have been receiving premiums all these years and an increase in premium immediately after a liability is not expected, as the very nature of insurance premium is covering all risks and not profiting from it”.