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Container scarcity puts a damper on India’s export revival

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The ongoing container scarcity has dampened the pace of revival in Indian exports, due to the inability in ferrying goods across the sea.

The recent months have witnessed an uptick in the transportation of shipments of certain goods, especially sales of packaged foods with people choosing to eat at home during lockdowns, thereby boosting hopes and expectations of a busy Christmas season.

However, the global impact of the coronavirus crisis on trade and a sudden plunge in Indian imports have led to a scarcity of incoming shipping containers, thus leading to a rise in freight charges about seven times.

Vimal Agro Products Pvt., which exports goods like canned mangoes and pickles to the Indian diaspora, shared that orders that were supposed to arrive in Australia and New Zealand in time for Diwali reached only after the festival.  There is concern of a “big impact” if the container shortage persists, says Chirag Nemani, vice president for marketing and sales.

“Empty containers were easily available earlier but now that is a big issue,” Mr Nemani said. “Customers don’t want delay.”

The scarcity of containers has severely impacted Global trade, another reason being strong predictions of a collapse this year that prompted carriers to cancel sailings, which instead proved too pessimistic.

India’s situation has been aggravated by geopolitical tensions with China that have had a bearing on imports and also incoming containers — even while exports saw a rise.

India’s exports in terms of volumes grew 24% July-October, while imports reduced 28% from the previous year. According to the country’s Container Shipping Lines Association, this led to companies, which used to ship out empty containers from India, instead bringing them into the country and moving them inland where factories are located at a huge cost.

Vimal Agro’s freight costs have doubled to $1,800 per container for the U.K. and charges have gone up three times to $1,500 for Australia.

Capital Ventures, which sells spices, bakery goods and staples under the Parliament brand now have to pay $200 for Singapore where it was earlier $20 and $700 instead of $200 for Dubai.

Organic Tattva, which is reporting a 50% increase in sales of organic foods to retailers including Costco Wholesale Corp., and the UAE-based Lulu Group shared that shipments would have been 20% higher had it not been for India’s harsh lockdown that severely impacted the availability of manpower and now the container shortages. This led to economic shocks combined with logistics-induced challenges.

Sharad Kumar Saraf, president of the Federation of Indian Organisations said that the industry body has been informed that the government is asking shipping lines to arrange for 100,000 containers per week.

The waiting time for containers is currently two weeks or more, while normally it is 1-2 days.This will definitely impact Christmas orders.”

~Sharad Kumar Saraf, President of the Federation of Indian Organisations

Source: Bloomberg

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