Global container shortage poses fresh export hurdle for India


Published on: August 30, 2021.

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After touching a record high in July 2021, Indian exports could witness a sharp slump in August due to a shortage of containers around the world. Here is all you need to know.

India’s exports in August will take a hit due to the global container shortage. (Photo: Reuters)

A global shortage in shipping containers could slow down Indian exports after a sharp recovery earlier this year. A wide range of exported items across various industries could be hit due to the container shortage that has resulted in record freight rates.

The global container shortage is a result of congestions at Chinese ports that have been closed or operating at lower capacity after the nation announced fresh restrictions due to Covid-19, reported The Economic Times.

The high demand for containers in the United States and Europe has also led to a surge in container rates. Container charges have increased to record levels in the past 10-15 days, acceding to industry executives who spoke to the publication.

CRITICAL EXPORT HURDLE
India’s exports had hit a record high of $35.2 billion in July 2021 — the highest-ever monthly figure in the country’s history. However, exports now face a risk of slowing down due to the fresh shortage of containers and a subsequent hike in freight rates.

The charges for availing a container to or from India have increased to $7,000-$10,000, compared to $3,000-$4,000 a few months ago, as per industry executives. However, the final cost also depends on the distance covered.

The export industry is already feeling the heat of high container rates amid shortage and the matter has been flagged to the central government. The Federation of Indian Exports Organisation (FIEO) and a few other industry bodies have informed the Centre about the hurdle, urging it to intervene in the matter, reported ET. The industry bodies fear that India will lose out on key exports ahead of the upcoming holiday season in the West.

The FIEO has asked the government to release approximately 25,000-30,000 containers that are lying at different ports in the country. These containers have not been unloaded due to disputes with Customs and other departments.

Ajay Sahai, director general of FIEO, told ET that the exporters’ body has asked the government to help in release these containers, so they can be used for exports.

Some low-value export items that are exported in high volumes have been impacted the most. The export of items includes granite tiles, tea, rice and furniture have been hit while other categories have completely stopped.

In view of the shortage of containers and high freight rates, Indian exports may have dipped sharply from record levels, according to industry experts.

Only items that have to be exported via ship or ship-to-air have been impacted due to the container shortage. Products such as gems and jewellery, chemicals, smartphones and leather products that are mostly exported via air have not been impacted.