Scarcity of empty containers looms large on Indian exporters

COVID-19 impact: Scarcity of empty containers looms large on Indian exporters

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As per the latest information from various sources, manufacturing in China is slowly recovering from the Coronavirus outbreak lockdowns. However, container transport is still reported as infrequent and expensive.

According to Drewry (a maritime research company) analysis, ocean carriers cancelled 105 sailings from Asia to Europe and Asia to the US this month, with the ships that have sailed departing with very poor utilization levels. Anyhow, the revenue lost on well over 1 million of TEU by shipping companies due to the blanked sailings, the voyage losses recorded on the vessels that have been sailing are likely to be high. In order to mitigate the losses, container lines are rolling out FAK and GRI increases for 1 April.

CMA CGM, for instance, announced a USD 500 increase on its FAK rate from Asia to North Europe and announced a PSS of USD 300 per container from North Europe to Asia from 15 March. MSC has applied GRI USD 200 for 20’ and USD 300 from 2nd March 2020 handover in India.

Coronavirus is beginning to impact shipping operations in the Indian subcontinent too. Blanked westbound Asia-North Europe sailings mean export containers out of India that transship at Colombo are not being picked up. In addition to this, the widespread closure of automotive component production facilities in China is having a severe impact on India’s burgeoning car manufacturing industry.

The situation is being compounded by an increasing scarcity of containers for exporters. Normally, there were three-weeks’ worth of available empty boxes with shipping lines but now there is barely two days’ stock available specially in North India as imports are coming in low quantity.

This shortage has already started hitting Indian exporters and it is expected that imports are going to be seriously affected in the next four weeks as whatever containers were in pipeline are going to be utilized. March and April are going to be terrible in terms of scarcity of container and space availability on vessels. Northern India’s cargo shall start going to gateway ports/Nhava Sheva or Mundra.

The article is authored by Mr Bhupendra Kumar, Head Logistics,  IOL Chemicals & Pharmaceuticals Limited 

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