Container shortage threatens India's nascent export revival

A RECENT revival in Indian exports is under threat because there aren't enough shipping containers to get the goods across the sea.

Shipments of certain goods, especially packaged foods, had surged in recent months as more people eat at home during lockdowns. But the global impact of Covid-19 on trade and a slump in Indian imports have led to a shortage of incoming shipping containers, boosting freight charges about seven times.

Vimal Agro Products, which exports goods to the Indian diaspora, is concerned about a "big impact" if the container shortage persists, said Chirag Nemani, vice-president for marketing and sales.

"Empty containers were easily available earlier but now that is a big issue," he said. Global trade is being roiled by a shortage of containers because dire predictions of a collapse this year that prompted carriers to cancel sailings have proved too pessimistic. India's situation is worsened by geopolitical tensions with China that have reined in imports - and subsequently incoming containers - even while exports are recovering.

India's exports in terms of volumes grew 24 per cent during July-October, while imports fell 28 per cent from the previous year. Due to this, companies which used to ship out empty containers from India had to now bring them into the country and move them inland where factories are located at a huge cost, according to the country's Container Shipping Lines Association.

Vimal Agro's freight costs have doubled to US$1,800 per container for the UK and charges have gone up three times to US$1,500 for Australia. Capital Ventures, which sells spices, bakery goods and staples is paying US$200 for Singapore where it was earlier US$20 and US$700 instead of US$200 for Dubai.

Organic Tattva, which is reporting a 50 per cent increase in sales of organic foods to retailers including Costco Wholesale Corp and the UAE-based Lulu Group, said shipments would have been 20 per cent higher if it weren't for India's harsh lockdown that hit the availability of manpower and now the container shortages. The US contributes 40 per cent of the company's revenue.

"The shortage of containers started a few months back and has exacerbated in the last few weeks," said Manish Sharma, a partner at PwC India. "Unfortunately, this has come even as our exports were picking up, so on top of an economic shock we now have a logistics-induced challenge."

Sharad Kumar Saraf, president of the Federation of Indian Organisations, said the industry body has been informed that the government is asking shipping lines to arrange for 100,000 containers per week. "The waiting time for containers is currently two weeks or more, while normally it is one to two days," he said. BLOOMBERG