The Chennai Port is facing a 25 per cent shortage of containers due to supply and demand gap sparking concern among exporters who now have to pay double rates to send consignments as the pandemic has triggered a worldwide shipping crisis.

Regional chairman of Federation of Indian Exporters Organisation Israr Ahmed told Express that the cost of sending a 40-feet container to the United States before Covid was $2,000. “Last year, it rose to $4,500 and now it is priced between $6,200 and $6500. Similarly, for Europe the cost was $1,100 to $1,200 earlier, and it has gone up to 5,500. The price hike is attributed to Covid that has left the global shipping lines with backlogs and delays due to labour shortage, reduced capacity of logistics systems, congestion at ports as well as quarantined cargo,” he added.

Defending the container price hike, Chennai and Ennore Ports Steamer Agents Association chairman CR Raghavendra said that there is a huge demand and supply gap. As of now, the Chennai Port has less than 25 per cent containers compared to usual stock. “All efforts are being made to receive back many containers that are stuck with the Customs. There are around 10,000 containers, which are lying vacant due to some issues,” he noted.

Raghavendra expressed hope that the prices will stabilise in the next three to four months once the demand and supply gap is sorted out. “If we are to run the vessels with 10 per cent space vacant, who will bear that loss,” he asked.

Indian Drug Manufacturers Association chairman for Tamil Nadu, Kerala and Puducherry State Board J Jayaseelan told Express, “Although pharma exports are not impacted as much as other sectors, the container price rise has cut down margins of pharma exporters by 5 per cent.”

Israr Ahmed opined that the container crisis will go on till October or November. “The exports in India are beginning to pick up, with the US market opening, and the European market recovering. There is a huge demand for products, but exporters in India are worried on fulfilling orders on time due to non-availability of raw materials and the pandemic,” he said, adding that while the market in Karnataka is yet to recover, Tamil Nadu is better off.

Sajin Verghese, who is working with Bumilaut Shipping Services in Indonesia noted that price of containers routed from Asia to Europe or the US has increased due to imbalance in global trade, which has been amplified by the pandemic. He added that bookings are now being accepted based on profitability and strategic importance.

Revival under way

Israr Ahmed opined that the container crisis will go on till October or November. “The exports in India are beginning to pick up, with the US market opening, and the European market recovering. There is a huge demand for products, but exporters in India are worried on fulfilling orders on time due to non-availability of raw materials and the pandemic,” he said
Source: The New Indian Express