A threshold was crossed last week somewhere off the coast of Yemen that most Indian exporters felt before they read about it in the papers. The Red Sea shipping crisis has now been ongoing for a thousand days and counting starting in November 2023 as a regional flashpoint with Houthis boarding the Galaxy Leader near the city of Hodeidah and has become a structural feature of world trade. It's not been corrected by warships. Neither diplomacy nor anything else has solved it. They were deployed as escorts in the navy for two years which saw them intercepting missiles in flight, but they do not seem to have restored any of one thing shipping truly relies on: confidence.

It is significant to India more than to nearly any other big economy, as India is the geographical nexus for all the routes this crisis has disrupted: from Europe and the UK to North Africa, or the US east coast, or the Strait of Hormuz, which still hosts a significant portion of India's crude. Over the weekend, the economic think tank GTRI made it very clear that maritime insecurity was not an emergency that needs to be waited out but a permanent cost of doing business: India had to prepare for it with more shipping capacity, deeper cushions for trade finances, stronger naval presence and a more diversified route of transit away from the single strait.

Those numbers are not random. Despite a limited number of services being cautiously restored by Maersk and Hapag-Lloyd, Suez Canal operations have continued at 60-70 percent of pre-crisis levels until now. That optimism was dashed on August 11 when an assault on the Egyptian-owned Tihamah crewed by four Egyptians and two rescuers resulted in the deaths of four Egyptians and two rescuers, a reminder that the corridor is armed and unpredictable, rather than merely inconvenient. Most container lines still use the Cape of Good Hope as the default route, which takes approximately 5 to 7 percent of the world's container shipping capacity and 10 to 14 days longer to make the trip. At least in India, freight rates on India-Europe and India-US East Coast lanes hit a 200 to 400 percent jump at the peak of the crisis and remain 25-40 percent higher than before the crisis, while war-risk insurance rates are just another continuous charge on Indian trade.

That surcharge falls first and foremost on India's small and mid-sized exporters, from textiles to engineering goods, chemicals to marine products, all those who are on a tight cash flow. An MSME exporter at Tiruppur or Rajkot, can generally not hedge freight volatility and can only renegotiate contracts with a large trading house; higher freight rates, higher insurance prices and delayed payments result in working-capital stress which is only apparent in cancelled orders before it even appears in trade data releases.

The disruption of the Red Sea flows ironically on top of the wider tremor in the Strait of Hormuz which has been festering between the United States and Israel and Iran, with tanker traffic also being held up due to the low volumes of Suez. About 20% of the world's oil is transported through the 33km channel, and if it is severed, oil could cost the world $100 per barrel, and could be funneled directly into India's import bill and inflation statistics. It is important to remember that almost 20,000 Indian seafarers operate the shipping networks that keep the shipping corridor running not just strategy, but a responsibility to the citizens of the shipping industry.

So far, New Delhi has been responding almost exclusively from a defence angle from the rotation of about two dozen Indian warships in the anti-piracy and escort missions in the Arabian Sea and Red Sea routes, to the External Affairs Minister S. Jaishankar's argument not without reason that the presence of the ships keeps insurance and freight rates low and elevates India's profile among its trading partners. That's very true, and it's required. However, it is just half the picture and the underlying argument of GTRI is that India has been under-investing in the commercial half for decades. Only 1 per cent of India's merchant marine is capable of carrying Indian cargo, while the remaining 94 per cent is still prevalent with foreign flagged vessels, which is costing India over $75 billion in foreign exchange annually. Along with China, South Korea and Japan, the global capacity for domestic shipbuilding makes up a rounding error.

Paper has moved, the Indian flagged fleet has increased from 1205 to 1549 vessels, gross tonnage from 10 million to 13.5 million tonnes over the past decade and ₹69,725-crore shipbuilding package is on track to boost annual production capacity five times, and the Sagarmala programme is driving ₹5.8 lakh crore investments in port & logistics infrastructure, as per the Maritime India Vision 2030 roadmap. Cargo at the coasts has almost doubled. These are not minor pledges. But a crisis that has now persisted for nearly three years is a pretty clear indication that the time for this is not for this to ramp up, but for it to ramp down; that alternative routes ones that go through the Gulf, through Central Asia, through anything that doesn't traverse a single choke point deserve the same urgency as the naval headlines that are still burning hot.

Global shipping has been living off the fear in the past thousand days, rather than addressing it, heading for a burning building instead of putting out the fire.