India being the world’s second largest sugar producer, the local sugar mills signed contracts last year to export around 4 million tons of sugar this year. However, a scarcity of railway wagons along with surging fuel prices and limited storage availability at ports have rendered the sugar exporters struggling as local freight costs are seeing an upward trend, resulting the supply chain bottlenecks to tighten.
“If the situation continues, it will be tough for Indian exporters to meet the target of shipping 6 million tons in the year that started in October”Yatin Wadhwana, Director, Gradient Commercial Pvt.-a commodity trading and advisory company.
“Truck rates have surged 30% to 40% in the past month and that will hurt profits.” Talking about global prices of sugar, he said, “Anything above 20 cents to 20.5 cents per pound will be profitable for Indian exporters. Prices are at about 18 cents currently.”
Sugar exporters are unable to procure enough railway coaches and rakes to transport the sugar produce, which is already delayed due to unexpected rains in November. Such challenges to the movement of cargo, coupled with the rising domestic freight prices have been cutting down the exporters’ margins, however, their hopes are pinned on the shortage of sugar in Russia to boost exports in South Asian countries.