The pandemic has affected the health of the world population and has impacted the global economy in many ways. Here, we will talk about the export and import situation post lockdown in India. The world is currently facing a shortage of containers due to lockdowns and trade disruptions. While others have started to revive from the container shortage, in India, the situation persists.
The container shortage in India has affected exporters. It is partly due to trade restrictions imposed by the government for imports from China. There has also been a container freight surge due to the lack of containers.
Let us understand in more detail about the container freight surges and container shortage in India.
What is container freight, and how it has been impacted due to the pandemic?
Freight, in general, refers to goods being transferred from one place to another by any means of transportation. According to a source, there has been an empty container pile-up at the US and Australia ports.
There are many exports from India to the US as the importers are now trying to replenish their inventory depleted during the lockdown in India. One of the reasons for container shortages in India is also because new container manufacturing is limited in India.
Many shipments and cargos are getting delayed, such as pharmaceutical companies who wait two weeks to get bookings and containers for US ports. Shipments for marble, rice, and other agricultural commodities are also getting delayed.
Usually, the shipping lines maintain freight rates for a month. However, now freight rates are being changed frequently within a span of seven days. The shipping lines have raised surcharges and implemented blank sailings and rolled cargo. The container freight rates for exports out of India have increased by 67% due to a shortage of inventory.
Also, exporters don’t have government support in the form of any financial aid. Due to the current market situation, even bankers aren’t very supportive. The low demand in India has decreased imports, which has increased the shortage of containers for exports.
As a result, freight rates for short-haul routes have surged, and it has increased by 30% for long-haul routes as well.
Carriers are charging high due to low container inventory and insufficient space available on the vessels. The blanked sailing to India has increased during the lockdown, and the number of vessels at Indian ports are still low. Thus, finding larger lots of containers is still difficult.
This imbalance of equipment has increased worldwide because the exports have increased and imports have dropped in India.
The Jawaharlal Nehru Port in Mumbai is India’s largest container port. Exports from this port have exceeded imports by 41,600 TEU in July.
According to traders, the problem of container shortage will persist until imports from China increase. The lockdown due to Coronavirus and the recession has led to the fall in imports. Imports from China also declined due to the geopolitical stand-off between the two countries. Some carriers have recently started to bring empty containers to India from Dubai and other countries, which can help the freight rates go down eventually. However, the decline in container freight rates will be mediocre unless there is an increase in India imports.