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Indian exporters feel the heat of container logjam

Foreign buyers have started cancelling the shipments boarding from India because the exporters are not able to avail any containers leading to consignments lying at various ports for weeks together.

This, coupled with ever-soaring freight rates and congested ports, has left the small-time exporters of India fighting for every penny as the freight rates are higher than the cost of their product.

Container News spoke with the Managing Director of the New Delhi-based clothing manufacturer, Jyoti Apparels, HKL Magu, who said that “high freight rates can be absorbed, but unavailability of containers has changed the rules of the game. Several vessels are bypassing India because there are no containers for consignments to be shipped. Sometimes our consignments are lying in ports for three to four weeks. International buyers tell us to either cancel the order or send it by air. But air freight rates have also skyrocketed”.

Airfreight rates per general consignment oscillated between US$1.07 to US$1.34 before the pandemic which is now between US$4.38 to US$6.04.

“For us, apparels are perishable items because the fashion and trend change quickly. If a particular colour is to go on shelf for the month of August but the consignment does not reach its destination on time, the value of that apparel becomes half and goes out of trend. Until we have our own containers, the shortage of boxes will continue,” said Magu.

The readymade garments exports have seen a 20.75% dip in the last fiscal while textile and apparel saw a 13% decline in exports.

Monetary transactions are on hold after China stranded at least 1,200 containers with shrimp exported from India suspecting covid virus traces in outer packaging.

Manish Shinde, founder of Aquaris, a seafood trading company, said, “Due to shortage of containers, exporters are unable to take new orders and the confirmed orders are also cancelled because of delays which lead to stockpiling, this also lands a heavy blow on the cash flow and results in losses too. The entire industry is facing a huge drop in the number of shipments.”

While the exporters are in talks with shipping lines and the shipping ministry of India, the Federation of Indian Exporters Organisation (FIEO) will soon launch an online portal to ease the exporters’ business operations.

FIEO Chairman, Dr A Sakthivel told Container News that, "FIEO is launching an e-module by mid-August 2021 to provide a platform where shippers can place their requirement of containers and the shipping lines, freight forwarders can put out their competitive quote. The marketplace will ensure transparency, competitive pricing and efficient planning.”

While the container crunch issue is not exclusive to India, the export body has requested the shipping lines to bring in more empty containers and has asked the Indian Railways to provide free movement of containers from gateway ports to hinterlands. The waiting period for containers currently ranges from 10 to 15 days, which used to be just a day in early 2020. Exporters are paying a 100% premium for containers availed on an urgent basis.

Sheuly Ghosh
India Correspondent

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