The spread of the Coronavirus variant Omicron has disrupted the global supply chains, causing the container prices to spike by 10-15% in January at all major ports of India.
As per shipping companies, the Chennai port in the first week of January witnessed a rise of $2,100 (Rs 1,55,316) for a 20-foot dry container from about $1,880 in December.
The average price of a 20-ft dry container in Mundra climbed to $1,950 in the first week of January from $1,763 in December. While the Nhava Sheva in Navi Mumbai rose to $1,900 against $1,775 in December.
As per market officials, the price of a 40-ft dry container at Chennai Mundra and Nhava Sheva rose to $5,100, $4,900, and $4,850, respectively, from $4,780, $4,650, and $4,600, respectively, in December.
Several factors including the widespread restocking by retailers in China ahead of the Lunar New Year starting February 1 and the country’s rising Covid-19 cases have accounted for the rise of container rates.
“Container turnaround times at major ports in China are once again on the rise due to bottlenecks ports are facing because of rising Covid cases and logistical bottlenecks,” an official from Container xChange said.
The suspension of trucking activities in several parts of China, and stricter restrictions on the movement of trucks moving goods in many districts, have drastically slowed the movement of containers in major Chinese ports.
Congestion at US & UK Ports
Another factor adding to the bottlenecks of the global shipping industry is the severe congestion experienced at ports in the US and the UK.
“Until congestion at major ports in the US and the UK is cleared, there will continue to be a major imbalance in the supply and demand of both vessel capacity and containers. As the Omicron variant brings more disruption, with the Chinese New Year around the corner and some ports, including Ningbo, already facing lockdowns, we are expecting a volatile start to the year for ocean freight logistics,” Jefferies Equity Research said in a report earlier this week.
AP Moller-Maersk, one of the world’s biggest container shipping companies, in a statement to its customers “The pandemic is still going strong, and unfortunately, we are seeing new outbreaks impacting our ability to move your cargo. The situation is particularly challenging at several hub ports and gateway terminals,”
In addition, experts believe that the rise in Indian exports has also contributed to an increase in spot container freight rates at major ports in the country.
“Many companies are likely to get into bidding wars to extradite their export and import cargoes and this is likely to lead to higher tariffs,” a Mumbai-based shipping analyst said.
In the first week of January, the Indian export witnessed an increase of 33 percent to $7.63 billion on the back of healthy sales of engineering goods, petroleum, gems, and jewelry, according to preliminary data from the commerce ministry.
“Trading volumes have risen in the past two months and they are expected to remain high for the next few months as several companies look to supply the pent-up demand in other countries,” another Mumbai-based shipping analyst said.
Demand for Indian merchandise and gems and jewelry along with demand for White goods are on a rise, says shipping companies.