India's exporters of everything from clothing and agricultural products to consumer electronics and furniture are experiencing a decline in their exports due to a global container shortage and a consequent increase in freight rates, leading many people to demand government intervention.
A severe container shortage - caused by massive congestion at Chinese ports that are closed or operated with much lower capacity due to Covid-19 restrictions, as well as massive demand for containers in the United States and Europe - has skyrocketed container rates. unprecedented highs in the past 10 to 15 days, ET said.
The cost of shipping a container to or from India is now $7,000 to $10,000, down from $3,000 to $4,000 six to eight months ago, they said. The cost varies depending on the distance travelled.
Exporters fear that double tariff hikes for containers and container shortages could hamper the recent surge in the country's goods exports to $35.42 billion in July — a new one-month record. Reported the problem to the center and asked for intervention and assistance. Otherwise, India could be the loser in global trade ahead of big Christmas orders in the west, it said. Tea exporters have requested an increase in the limit under the Transportation and Marketing Assistance Program (TMA), which is used to offset some of the transportation and freight costs for exporters. Although the TMA is only for agricultural exports, the FIEO has asked the Department of Commerce to come up with a freight subsidy program to help all categories of exporters.
While some major shipping companies are now shipping empty containers from India to the US and Europe, the umbrella association of exporters has also called on the government to introduce regulations to stop this.
“Also, there are 25,000-30,000 containers lying at different ports in the country, not being unloaded due to some disputes with Customs and other departments,” said Ajay Sahai, director general of FIEO. “We have asked the government to intervene so these containers can be unloaded in some private warehouses and then used by exporters.”
“The retail market has picked up in the US and they need goods,” he said. “The brands have realised and are shelling out the additional shipping cost but still, it is a struggle to get containers. We were earlier using the ports in Chennai and Tuticorin, but now have started shipping from any port, like Mumbai, where we are getting containers.” A few weeks ago, container charges had shot up to a record $15,000, Seenivasan said.
“For the last two months, there are hardly any containers at Kolkata Port, from where the majority of teas go to the world markets,” said Anshuman Kanoria, chairman of Indian Tea Exporters Association. “This will impact tea exports from India and it will not even touch 200 million kg in 2021, as compared to 207 million kg in 2020.”
Sources:- the economics times
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