Context: 

This editorial is based on the news “Bypassing the Suez” which was published in the Financial Express. India and the United Arab Emirates (UAE) formalised a bilateral inter-governmental agreement for implementing the IMEC Corridor (India Middle East Europe economic corridor) during the Indian Prime Minister’s recent visit to the UAE.

What is IMEC Corridor?

• The proposed IMEC Corridor will consist of Railroad, Ship-to-Rail networks and Road transport routes extending across two corridors, that is,
  • East Corridor: connecting India to the Arabian Gulf,
  • Northern Corridor:  connecting the Gulf to Europe.
• IMEC Corridor is a crucial alternative to continental transit through the Suez Canal. 

IMEC Corridor Map

IMEC Corridor: An Alternative Trade Corridor

Global trade heavily relies on key shipping routes like the Malacca Strait, Strait of Hormuz, Panama Canal, and Suez Canal. 

• • Of these major shipping routes, Panama Canal and the Suez Canal have been facing issues:

• Disruptions in Panama Canal:  

  • Drought in surrounding areas has reduced water flow in the Panama Canal, causing navigation challenges for containers and resulting in longer transit times for cargo.

• Persistent Issues in Suez Canal: 

• • The Suez Canal has faced ongoing disruptions, with the notable incident of the Ever Given container blocking the canal in early 2021, costing the shipping industry over $50 billion.
    • Congestion:  in the canal leading to delays in the shipment and rise in freight costs.
    • Attack by Houthis: Since December 2023, there have been persistent attacks on ships by Yemen-based Houthi militants, arguably backed by Iran, and resorting to aggression in the Red Sea to demonstrate their support for Palestine in the current strife in Gaza. 
    • Diversion to Longer routes: Several carriers have diverted to the longer Cape of Good Hope route leading to longer shipping times and transit costs. 
    • Increase in freight costs: These have led to increased insurance premiums, higher freight rates, and safety concerns, impacting shipping and transportation capacity.

• IMEC Corridor as an Alternative: 

  • IMEC Corridor offers multi-modal connectivity from India to Europe, potentially reducing transit time and costs.
  • IMEC Corridor will provide an alternative Route for North-South trade, particularly between India and Europe.

• Effectiveness of IMEC Depends: 

  • On factors such as the speed of loading/unloading, trade facilitation mechanisms, and the ability to provide secure passage, especially in regions prone to political tensions.

Conclusion:

The IMEC Corridor’s eventual acceptability will depend upon the abilities of its members to assure its users about safe passage.