The huge shortage of the empty container faced by the Indian exporters can be well addressed if the government speed up the movement of empty containers from ports to the hinterland for loading export goods and stop empty boxes from being taken out of the country. This could definitely help improve the availability of containers, if not bring the freight rates down.
Exporters have been looking for support from the government with the ever-increasing freight rates and shortage of containers in the nation, which is constantly increasing their operational costs.
While the government has been looking at ways to help the exporters, a source from the Ministry of Ports, Shipping and Waterways said that there is hardly anything they can do regarding freight rates.
The government is veering around to the view that all empty containers from ports to hinterland locations in the North should move by rail only, which typically takes about three days from the western region.
Movement of boxes
Around 25-35% of the import containers after being cleared of the goods are moved from the northern hinterland. Once they reach the west coast ports, some of the import containers are de-stuffed at warehouses and the empties are handed over to transporters to be hauled to the hinterland for loading export cargo. The shipping lines pay as little as possible to the transporters for the trip.
To recover their cost, the transporters pick local cargo and drop them at various locations en route to the inland container depots (ICD) in the North nominated by the shipping lines for delivering the empty container.
“This trip takes about two weeks,” says TS Ahluwalia, President, Northern India Shipper Association. “If the empty containers are moved by rail, they can reach the northern hinterland in three days,” he says. This mode is also cheaper.
Container Corporation of India Ltd (Concor) has introduced a volume-based rebate on rail freight for repositioning of empties in a bid to ensure sufficient availability of containers at hinterland ICDs to boost exports and cut logistics costs, beginning September 1.
The state-run company said that the existing scheme for repositioning of empty containers from gateway ports to hinterland terminals with a rebate of 50 per cent on rail freight will continue till March 31.
The scheme has been extended to the repositioning of empties from portside Concor container freight stations (CFSs) to ICDs also for export purposes, the company said in a trade notice.
Looking at the situation, the exporters are urging the government to extend the time limit for keeping empty containers in the country without paying import duty from 6 months to 12 months.
At present, empties can be kept in India for six months, per a convention followed by the Customs Department. Shipping lines take them out just before the expiry of six months to avoid the import duty.