India continues to see increased container demand amidst Sri Lanka shipping traffic diverting to South Indian ports

Post By : Karvi Rana
Post Date : July 21, 2022
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Reading Time: 3 minutes

The Indian ports continue to bear the impact of the Sri Lanka economic crisis. There has been a 25 percent shortage of containers at the Chennai Port which has made it face a rise in shipping costs. Now as the trade routes open between Asia and the US as well as Asia and Europe, the shipping industry in India is struggling to keep up with the gap between container demand and supply, the container xChange report titled ‘Where are all the containers’ states.  

“Colombo has always been a priced possession of the Indian maritime trade; however, Sri Lanka’s crippling economic crisis has triggered an altering response in the region’s shipping industry. To put things into perspective, the industry has observed some freight forwarders avoid calling Colombo port. This has put maritime logistics in other parts of the region in a beneficial state”,

Christian Roeloffs, cofounder and CEO, Container xChange. 

“However, when it comes to the Europe trade route, India has seen schedule changes and blanked sailings due to the reduced throughput of cargo which is making carriers remove a few sails out of the schedule. Nonetheless, it is very unlikely that there will be a drastic change in the freight rates which eventually keeps it near pre-covid charges.” 

Container trading Insights 

 Based on Container xchange data, the average prices for 20DCs have been on a steady rise since April. In June, they rose by 3.60% to $ 2367 for 20DC. For 40HCs too, the average prices saw a 2.60% hike from May and became USD4120. The average prices for 20DCs in Nhava Sheva and Mundra port continued to increase in June. 

Mundra in the month of May was the costliest port in the world, for 20DCs and the second costliest for 40HCs. Mudra is the fourth costliest port for 20DCs at $2471 with a 0.70% increase in the average price for this month. And, for 40HCs it’s the seventh costliest port with average prices at $4064 with a drop of -5.50% from May.  

A rise in average prices always means high demand for the commodity. This trend is a result of the shift in traffic from the Colombo port in Sri Lanka to the ports in South India.  

Impacts of the Sri Lankan economic crisis on surrounding nations  

The Container Availability Index also observed the slowed-down container movement in Colombo. In the last few weeks, the CAx score for 20DC containers at Colombo has been over 0.5 with week 26 standing at 0.57. This again is a reconfirmation of the fact that the number of containers leaving the port is less as compared to those entering.  

Speaking of Nhava Sheva, Mundra, and Chennai ports the CAx score is way over 0.5 for both 20DCs and 40HCs, indicating a disbalance in the number of containers entering the ports and the number of containers leaving. 

Alongside triggering the development of ports in India, the Colombo crisis has also caused cargo containers to pile up, which were originally meant for Sri Lanka at Indian ports due to the lack of inter-terminal container transport efficiency owing to the fuel crisis.  

This is likely to cause congestion at the ports of India resulting in increased costs. 

Commenting on India’s situation caused by the ongoing traffic diversion and cargo pile-up at Indian ports, Christian Roeloffs, founder and CEO, of Container xChange further added, “ To cope with the current scenario and ease the maritime trade pressure in the region, Indian ports have begun expanding their cargo handling and traffic management capabilities.  

With shipping traffic diverting to Indian ports and container congestion added to the increasing demand for containers, the Colombo crisis’s impact has rippled on the container average prices. Nonetheless, this trade route shift has come at an opportune time for India considering that it has been working towards creating its transshipment hub and increasing its footprint in the region’s and world’s maritime shipping.”  

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