Egyptian garment exporters hit by ban on air cargo

03 Dec '15

3 min read

The decision of Egypt's state-owned airline Egypt Air to suspend the shipping of commercial cargo on passenger flights bound for New York and Canada has triggered a crisis in the export of Egypt's spinning, weaving and garments sector, according to media reports.

Egypt Air said that the decision to ban freight on passenger flights is based on recommendations by the US Transportation Security Administration y delegation, which visited Egypt last week, in the aftermath of the Russian jet crash over Sinai on October 31. The incident has led to tighter security at Cairo's international airport.

Russia claims it was a "terrorist act" that brought down the plane. An Egypt-led international investigation is yet to announce its findings. According to a theory, the plane was blown up by a bomb in its cargo hold.

As if the Egypt Air ban on carrying cargo on passenger flights wasn't enough, carriers flying cargo to the US from Egypt must now be quarantined for 48 hours upon arrival and before transits on domestic flights from local airports, according to the new rules.

Qualified Industrial Zones (QIZ) exporters have been the hardest hit by the decision. The QIZ agreement which Egypt signed with the US and Israel in December 2004, gives Egyptian products access to American markets without customs or quotas on condition that the Israeli component represents no less than 10.5 per cent of the finished product.

The textile, garments and furniture top the list of Egypt's exports to the US. Between January and August 2015, Egyptian exports to the US totalled $974 million, of which $446 million came from export of textiles and cotton products, according to the Industry and Foreign Trade Ministry.

The value of Egyptian exports to the US through the QIZ agreement was about $824.2 million in 2014, of which $816.7 million from the spinning, weaving and garments sector.

Mohamed Qassem, chairman of Egypt's the Readymade Garment Export Council, said that about 10 per cent of total monthly exports used to be delivered by air freight, the majority of them by passenger flights.

Exporters are now apprehensive that they will now have to rely on the few shipping companies which are expected to raise prices that will increase the exporters' production cost and slash profits. (SH)

Fibre2Fashion News Desk - India

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