Indian Exporter Saves EUR 340,000 by Proactive Red Sea Rerouting Decision

Curated by Vinod Kumar Jain & Amit Jain · All Frontier Global · free, no login

India-EU

Challenge

In December 2023, Houthi attacks on Red Sea commercial shipping caused most shipping lines to announce diversion via Cape of Good Hope. An Ahmedabad textile exporter had EUR 2.8M of Christmas season garment orders en route to EU buyers (Netherlands, Germany, France) on vessels transiting the Red Sea. The choice: continue via Red Sea (risk of attack/delay) or proactively reroute (additional 10-14 days transit, higher freight rates).

Solution

AJG recommended immediate proactive rerouting for all vessels that had not yet entered the Red Sea. The exporter worked with their freight forwarder to divert 3 containers from a Dubai transshipment to Cape of Good Hope routing. EU buyers were notified of the delay with updated ETAs. Two containers could not be diverted (already past Suez entry point) — war risk insurance cover was verified and confirmed in place. Additional transit insurance for the Cape route was obtained.

Outcome

Cape-rerouted containers: arrived EU ports 12-14 days late — EU buyers accepted the delay with written confirmation of force majeure notice. Red Sea containers: one arrived without incident; one was delayed 23 days at Djibouti due to security restrictions but ultimately arrived. No goods lost or damaged. Total additional freight cost: EUR 18,000 (Cape routing premium). EUR 340,000 avoided in potential cargo loss (war risk insurance had a 2% deductible — EUR 56,000 — which is less than the full EUR 340,000 loss had a vessel been hit). Christmas season orders ultimately delivered with minimal penalty.

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