Container Shortage Hurts Exports, Empties should Move to ICDs

Hit hard by a shortage of shipping containers and a sharp increase in freight charges, industry bodies have petitioned the government seeking its intervention, warning that this could damage the green shoots of recovery seen in exports.

A key industry body, the Federation of Indian Export Organisations (FIEO), has suggested that empty containers be shifted to inland container depots (ICDs) where they are required. The FIEO has pointed out that the shortage of containers had contributed to a fall in exports in October and November.

Exporters say a 20-40% increase in sea freights since July and shipping lines shutting out containers abruptly had also made it difficult to meet order delivery deadlines.

Exports declined 8.74% from a year earlier in November and 5.4% in October, after showing growth of 5.99% in September. During the April-November period of this fiscal year, India's exports dropped 17.76% to $173.66 billion, while imports fell 33.55% to $215.69 billion.

In a letter to the shipping ministry, the organisation suggested that the government ask shipping companies to bring empty containers from other ports including in the Middle East, to save on storage charges and also get the business of freight.

“The government should ask customs and other enforcement agencies to de-stuff the cargo in the warehouse and release the containers that they seized,” FIEO president Sharad Kumar Saraf said in the letter.

Industry bodies say shipping lines were shutting out containers randomly claiming vessels were occupied, despite offering space three to four weeks in advance.

The handicraft sector is one of the worst hit by the shortage of containers for exports, at craft clusters such as Moradabad, Jodhpur, Jaipur and Firozabad.

A shortage of containers has resulted in exporters being asked to source those from nearby ICDs and hence pay a repositioning charge.

“The charge ranges from Rs 10,000 to Rs 20,000 depending upon the location of the ICD. This is an additional cost which the exporter has to bear and that increases the transaction cost. Further, there has been an increase in shipping charges by around 20-30%,” said Ravi K Passi, chairman of the Export Promotion Council for Handicrafts.

Senior government officials ET spoke with said the government was monitoring the situation, but there was little to be done as it was a global issue.

Industry says the shortage had also been triggered by continuous fall in imports, even as exports saw some uptick after easing of lockdown restrictions.

As per industry, the problem has exacerbated as shipments from China have come down. “We do realise there is a cycle in the container … But with the amount of imports from China coming down, and exports from India rising, there is an obvious mismatch in availability of containers,” Indian National Ship Owners' Association chief executive Anil Devli said.