India’s coronavirus lockdown has led to a crippling shortage of containers that is hurting exporters, who are battling to take advantage of economic recoveries in other countries.
Prices of shipping containers to destinations such as the US and Africa have more than doubled and there is a three-week backlog to secure a booking at some Indian ports, said exporters.
The shortages expose India’s weak consumer demand and tepid economic growth after imposing one of the world’s strictest lockdowns in an attempt to control the spread of the virus.
Maersk, the world’s biggest container shipping line, said that Indian exports of plastics, rubber and vegetables had bounced back as some countries returned to normalcy, causing a “considerable imbalance” in container availability. As a result, exporters are struggling to find enough containers to ship the goods abroad.
“We are witnessing a very slow recovery of imports and it is difficult to predict how long it would take for the imports to reach the pre-Covid times,” Adhish Alawani, Maersk India spokesman, told the Financial Times.
India is grappling with the aftermath of a harsh lockdown that did little to curb the spread of the disease but obliterated economic activity. Infections continue to climb — India has the highest caseload in the world behind the US — stymying businesses’ attempts to increase activity.
While India’s exports rose for the first time in six months in September, imports fell 19.6 per cent compared with the same period last year, the country’s Ministry of Commerce and Industry said.
Simmering tensions with China that boiled over after 20 Indian soldiers were killed in a June border clash resulted in more restrictions targeting Chinese goods, including bans on televisions and air conditioners.
“The restrictions on imports from China are contributing to the overall slump,” said Mr Alawani. The quarantine period for vessels from China is 14 days compared with seven days for ships from other countries, driving up costs, he said.
Maersk is trying to divert more containers to India to address the shortage. “We have increased our repositioning of empty containers from the Middle East by almost three times to support our customers exporting out of India,” said Mr Alawani.
Snehal Modi, export director of Shah Nanji Nagsi Exports, one of the country’s largest grain exporters based in the central Indian city of Nagpur, said prices of 20-foot containers to west Africa had surged more than 100 per cent. A container that used to cost $1,000 before the pandemic now costs up to $2,200.
“The situation is stressful,” said Ms Modi. “It’s a big amount to pay for container freight and the margins just aren’t there.”
Ms Modi added that “getting space on vessels is a big challenge now” and that the disruption was causing uncertainty. “Our planning has gone a little haywire, shipments have started getting delayed.”
Before the shortage began in September, companies could expect to secure a container within two weeks, said Rakesh Pandit, co-founder and chief executive of Conbox Logistics, a shipping services company in Pune.
“[Now] everyone is considering themselves lucky if they get a booking three weeks in advance,” he said.
But the situation is unlikely to ease soon with consumer demand still muted as India battles to rein in the virus, said Mr Pandit.
“I know importers who used to use 20 to 30 containers a month,” he said. “Some of them have done nothing for the past six months. They are still stuck with inventory from before the pandemic.”
Source: Economy - ft.com
