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Russia-Ukraine crisis threatens to strain Indian container trade outlook

Albeit an early measure of the impact, there is an emerging view that disruptions from the ongoing Russia-Ukraine conflict will cut into the pace of Indian container trade growth.

The latest official data shows India’s 12 major government ports logged a 22% increase in combined container volumes in the April-to-January period, the first 10 months of the fiscal year 2021-22.

Even more notable, the top handler, Jawaharlal Nehru Port Trust (Nhava Sheva), is on track to end the current fiscal year on a stellar note, having already surpassed the previous record growth seen in fiscal 2018-19.  The port racked up 5.17 million TEU between April and February (11 months), compared with the 5.13 million TEU for the full 2018-19 period.

However, with leading shipping lines temporarily cutting off shipping services to and from Russia, Indian freight industry stakeholders have begun to closely watch the unfolding impact of the latest disruption.

“We closely follow the ever-evolving situation with the governments posing new sanctions on Russia and we start seeing the effect on global supply chain flows,” Maersk said in a statement. “With the fluid circumstances of regular updates and adjustments to the sanctions list, we see a clear need to take some time to establish new and revise existing processes of accepting and handling bookings.”

“We start seeing the effect on global supply chain flows such as delays, detention of cargo by customs authorities across various transhipment hubs, unpredictable operational impacts,” the Danish carrier added.

According to Sanjay Bhatia, CEO and co-founder of the online freight platform Freightwalla, India’s bilateral trade with Russia and Ukraine stood at US$11.9 billion and US$3.1 billion, respectively, last year and he believes that the current unrest will strain overall export-import trade flows and the flow of goods in and out of India for these countries.

“We are keeping a close watch on the situation and advising our clientele,” pointed out Bhatia.

“We believe exporters with a larger share of business with these countries are likely to be heavily impacted and may have to look for alternatives for sustenance until the situation normalises.”

Interview with Sanjay Bhatia, CEO and co-Founder of Freightwalla

Federation of Indian Export Organisations (FIEO), the premier exporter body, noted that the crisis has compounded the pain points for shippers. It is believed that Indian exporters have approximately US$500 million held up in Russia due to the sanctions.

“It has added to the uncertainty for exporters and we are advising them to wait and watch as the exact implication of banking and financial sanctions needs to be evaluated,” said A. Sakthivel, president of FIEO. “The shipments, which are at the ports or in the voyage, may be quickly cleared and loss to exporters, either during transit or in payment, may be sympathetically considered by the government.”

Jenny Daniel
India correspondent

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