Israel-Hamas ceasefire deal: Impact on global trade, India’s economic interests

THE SHARES OF global shipping giant Maersk, seen as a barometer of world trade, hit a three-month low on Thursday after Israel and Hamas agreed to a long-awaited ceasefire and hostage release deal that could end the two-year-long bloody conflict in Gaza.

- RAVI DUTTA MISHRA

Beyond the humanitarian crisis, this could also offer a breather for global trade with the likely reopening of the crucial Red Sea shipping route.

Global freight rates had been surging since late 2023, going up nearly three times compared to the pre-crisis levels, after Yemen's Houthi rebels began attacking shipping vessels, forcing major shipping lines to reroute operations through the costlier Cape of Good Hope route. While this pushed up freight rates, adding to the woes of global goods trade, it offered a huge upside to shipping companies.

Amid fears of a widening conflict in West Asia, global shipping companies saw supernormal profits. Maersk last year raised its profit forecast three times, citing higher freight rates due to the Red Sea crisis and solid container shipping demand. This particularly impacted India's trade as 90-95% of its trade is supported by foreign carriers.