FIEO

Pharma and apparel exports take a hit due to unavailability of containers

Post By : Basundhara Choudhury
Post Date : November 3, 2020
Share with
Reading Time: 3 minutes

The shortage of containers and vessels in the country has led to a dire impact on the nation’s exports, especially in the pharmaceutical and apparel sectors.

With experts attributing one of the reasons to the drop in imports from China, an industry source said that the Ministry of Shipping informed how there are plenty of unclaimed containers lying at the docks unclaimed for months, which is directly resulting in the shortage of containers.

This has led to drop in exports and a consequent rise in freight rates.

With respect to pharmaceuticals, recently, the Pharmexcil said that they are in receipt of a communication from the Logistics Division of the Commerce Department informing that the division has several representations regarding the shortage of empty containers for exports.

The Division has interacted with the Container Shipping Lines Association (CSLA) and the stakeholders on the subject matter. It is, therefore, requested that the industry should give the projection of the requirements of containers for the next two months.

To combat the situation at hand, Commerce and Industry Minister Piyush Goyal has requested Mansukh L Mandaviya, Union Minister of State for Shipping and also Chemicals and Fertilisers to auction such cargo and also invite non-cartel shipping lines to give preferential berthing to cartelised lines that have berths leading to 40-60 per cent increase in freight, which will increase competition, lessen monopoly in the market and ultimately benefit the exporters.

Dr Dinesh Dua, Chairman, Pharmexcil in a response to this said, “If the Ministry of Shipping can break the cartel of shipping lines who have increased freight charges by 49-60 per cent by inviting other shipping lines who do not have berthing space to get preferential space and their rates are reasonable it’ll do a world of good to all exporters, including pharma.”

Industry experts are pushing for authorities to intervene as the shortage of containers have also taken a toll on the exports of pharma products to other countries.

“There is a need for the higher authorities to intervene in this matter, as the shortage of containers and increase in freight charges are not only affecting the pharma industry in India but our pharma products supply which goes to nearly 200 plus countries, is also likely to have a severe impact due to this hurdle. We are facing back to back challenges, which is ultimately slowing down the growth momentum of the Indian pharma industry. Therefore, we urge the authority to take up this matter on a priority.”

~ Nipun Jain, Chairman, Small and Medium Pharma Manufacturers Association (SMPMA)

He added that Central India has huge seasonal exports of rice, oranges, etc. and the post-harvest grain and fruit export season has picked up, which is causing further pressure on containers.

On the apparel side, the container scarcity problem is now becoming a cause of grave concern for apparel and garment exporters.

According to Apparel Export Promotion Council chairman A. Sakthivel, the acute shortage of feeder vessels and containers at Thoothukudi port have led to an impact on garment exports.

In a memorandum to the Union Ministry of Shipping, Mr. Sakthivel said that insufficient container inventory and capacity of small vessels are the reasons behind exporters facing difficulty in shipment.

This results in the exporters ending up paying higher freight cost to ensure timely delivery to the buyers.

“It has been gathered that there will not be any feeder vessel availability for next few weeks. Already, there are considerable shipments piled up and it is expected that the situation will get worse,”

~ Apparel Export Promotion Council chairman A. Sakthivel

The drop in imports from China led to an imbalance in container inventory in the country and exporters are unable to get good condition empty containers to export cargo from here.

This has also led to spike in freight costs as with more demand and reduced availability of vessels, freight costs have gone up.

He called on the government to act fast so as to ensure availability of sufficient containers and feeders vessels at the port.

Apparel exports declined in April, May, June, July and August this year compared to corresponding months last year.

Leave a Reply

Your email address will not be published. Required fields are marked *