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Importing from India: Space shortages hobble India’s re-emergence

In India Posted August 2, 2021 at 11:02 am
By Edi Lenkic

Importing from India (1200 × 627 px) x2

As India slowly eases out of lockdown, limited factory production, tight air and sea freight capacity are still restricting exports and presenting severe problems for businesses importing from India.

While businesses have reopened in major economic hubs like Chennai, New Delhi, Mumbai and Tamil Nadu, factories in Mumbai, Ahmedabad, Chennai, Delhi and Bangalore factories are operating with a limited capacity.

Many exporters anticipate production delays of at least a month, leaving end customers little choice but to air freight cargo to meet Christmas demand.  An unenviable situation considering the recent hikes in airfreight rates from major export hubs.

Meanwhile, container shortages and the glut of cargo out of China continue to pressure India’s sea freight market.

Most Indian ports still face equipment and space crises, with carriers restricting bookings on every major trade lane.

Reasons for the sudden shortage of capacity include the closure of Pipavav port, congestion in Colombo, a backlog of containers at key Indian export hubs (leaving limited space for loading), and port omissions at Mundra, Hazira, Vizag, and Kolkata.

Congestion in transhipment hubs Singapore, Port Klang, Busan, Valencia and Yantian, have blown out transit times, adding to global capacity shortages.

Meanwhile, the container shortage is compounding the capacity problem. At least 55% of the container fleet is stuck at various ports or on water compared with a typical average of approximately 30%, according to Container Shipping Lines Association (India).

The waiting time for a container has increased to between 10-20 days. Instant availability is possible, but it attracts premiums of more than 100%. Booking waiting times have blown out to over two weeks.

All major lines have very limited space ex-India, especially to Africa, Oceania and South America.

‘Crazy’ box rates out of India

Freight rates are high due to a prolonged spike in consumer demand, a shortage of containers, vessels and, in many cases, port capacity.

Currently, ANL is not taking bookings out of India. Other carrier’s rates have dramatically increased, with most having implemented a GRI and peak season surcharges.  Since the same time last year, buying rates have increased by around 400% (space priority surcharge included).

According to the Federation of Indian Export Organisations (FIEO), there has been an excessive rise in rates since the Covid-crisis began.

And even with a booking premium, some bookings were unable to be honoured.  There is so little space available that they want to sell for a premium whatever space they have.  Stories abound of outrageous quotes such as $22,000 for a TEU from Mumbai to Mombasa.

We empathise with your frustrations as you try to land your cargo at an affordable cost.  We are working closely with our India partners – one of India’s largest privately operated forwarders to secure as much space as possible.  If you would like to discuss your challenges with importing from India, please get in touch on 1300 651 888.

At Magellan Logistics, we provide a variety of services including licensed customs brokerage, supply chain visibility solutions throughout Australia. Contact us today for more information.

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