The majority of trade lanes between the Indian Sub-continent and the US travel through the Suez Canal. The Suez canal traffic authority charge an extremely high rate to pass a Ship through their canal and these high rates are past on to consumers in each products shelf price. A ship can take the long distance way to/from the US around the tip of Africa, but this does not save on cost or pollution due to the high amount of extra fuel burnt on the voyage.
The Asian market has a physically closer trade lane to the US West Coast. Thus giving this market a trade advantage with the US.
If the Indian government wanted to spark growth they should subsidize some of the Suez Canal toll cost for the Steam Ship Line Vessel's in order to lower trade rates and allow their industry's to sell their goods at a lower cost. The same can be said for US exporters. The US government can help to subsidize this toll cost or work with India leaders to leverage down the toll rates.
The majority of trade lanes between the Indian Sub-continent and the US travel through the Suez Canal. The Suez canal traffic authority charge an extremely high rate to pass a Ship through their canal and these high rates are past on to consumers in each products shelf price. A ship can take the long distance way to/from the US around the tip of Africa, but this does not save on cost or pollution due to the high amount of extra fuel burnt on the voyage.
ReplyDeleteThe Asian market has a physically closer trade lane to the US West Coast. Thus giving this market a trade advantage with the US.
If the Indian government wanted to spark growth they should subsidize some of the Suez Canal toll cost for the Steam Ship Line Vessel's in order to lower trade rates and allow their industry's to sell their goods at a lower cost. The same can be said for US exporters. The US government can help to subsidize this toll cost or work with India leaders to leverage down the toll rates.
Here are some more interesting thoughts and statistics on India.
ReplyDeletehttp://www.export.gov/articles/marketofmonth/eg_main_020622.asp