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Container shortage, rising logistics impact auto exports, says ACMA

ACMA
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The auto industry is still reeling under issues pertaining to cost and container availability, majorly fueled by its dependence on Chinese container manufacturers and foreign shipping lines, revealed Automotive Component Manufacturers Association of India (ACMA) on Tuesday.

ACMA president Deepak Jain said that auto component exporters are being confronted by a ‘4x to 6x increase in logistics cost due to the container issue’.

The apex body, which represents the interests of the Indian auto component industry, announced that component exports recorded an 8% dip in FY21 compared to the year before, though the good news is exports to China have seen a small increase.

“The container shortage began in H2 of FY21 but now the pinch has sharpened and the rates for a 40ft container to the US has gone up from $2,000 last year to $6,000 now,” said Jain. “A 40ft container to the EU used to cost $1,500 which is now $5,000. Given that the US and EU are our top export destinations, this has hit exporters badly,” the president added.

According to Jain, the container shortage is hitting Indian exporters more because “container services to and from India are dependent on foreign shipping lines and container manufacturing is entirely China dependent,” he said.

Component exports from India have dropped (for the second year in a row) by 8% from $14.5 billion in FY20 to $13.3 billion in FY21. It was $15.2 billion in FY19. India’s top export destinations are the US, Germany, Thailand, Turkey and the UK.

Also, exports to the US (26% of total exports) took a fall by 6% from $3.7 billion to $3.5 billion. Europe too is down 4% from $4.36 billion to $4.2 billion.

Last week, even TVS chairman Venu Srinivasan said that the company’s two wheeler exports in Q1 were hit by container availability.

The current waiting period for a container is now 1-2 weeks from just 24-48 hours before.

However, on a positive note, China has entered the top 10 export destinations with $360 million in Indian exports, a growth of 14% from $320 million in FY20.

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