A sharp drop in import volumes compared to exports has led to a shortage of containers for exporters from India resulting in soaring rates for ‘empties’ in the last three months.
According to TS Ahluwalia, President, North India Shipper Association (NISA), “Now, shipping lines have to specially bring empty containers to India from various parts of the world and that freight cost has to be paid by exporters.” Exporters are thus seeing a sharp surge in freight rates, he added.
Export viability hit
In fact, for produce with lower margins — like rice — higher shipping charges can reverse export feasibility, said Ahluwalia. Import of low-cost products from China, that used to occupy a large number of containers, has dropped or is getting stuck (due to delays in Custom clearance), which is adding to shortage of empty boxes. Exporters, wherever possible, are resorting to sending their cargo to ports from where they can be stuffed into containers, instead of getting containers to their factory in the hinterland and filling them. “Earlier, for exports to three major trading hubs for India —Dubai, Hong Kong and Singapore — the containers could be had at freight rates of $10-100 per twenty foot equivalent unit sized box. However, due to the imbalance, freight rates to get containers also have soared exponentially,” Ahluwalia, who is also Convenor, Port and Logistics Committee, Federation of Indian Export Organisations (FIEO), told BusinessLine.
Demand forecast issue
A large port on the West coast is receiving approximately 70,000 empty containers a month especially to meet the demand from exporters since September. Totally, shipping lines plan to bring in about four lakh empty containers per month to India.
In fact, another challenge is exporters are unable to provide an advanced demand forecast to shipping lines about the number of containers they require, said Ahluwalia.
Importers — who get two weeks of free time to empty cargo from their containers — are not in a hurry to free up the containers early as the demurrage charges for the first week after the two-week free period is low. Moreover, the faceless Customs approval process — the online approval — which was put in place recently has not yet been streamlined and is taking more time, said Ahluwalia.