Container freight that saw nearly 500% rise owing to shortage soon after the lockdown conditions eased had impacted Exim trade negatively at Mundra and Kandla port last year. However, it is gradually stabilizing and inching towards pre-Covid levels once again.
During the lockdown, many containers were stuck with China, the major producer of the containers, thus, leading to a massive shortage and pushing up freight. Again, there was a high demand across the globe after the lockdown eased and China was not able to meet the demand, leading freight charges to shoot up 400 to 500 percent at selected destination.
The containers are big boxes of standard sizes that are being loaded into vessels and can accommodate all kinds of exporters in various forms of requirements like refrigerated, open side, tank, ventilated, car carriers among many more commodities.
The other reason was high vessel freight because many vessels went into scrap for want of business during the pandemic lockdown. Container freight was a major concern for the Indian exporters whereby the shortage of containers created an imbalance in Exim trade.
According to the shipping line experts, new vessels are being added into the market in 2022-23, which has also eased the vessel freight. Besides NVOCC (non-vessel operating common carrier) that ships land containers and export them in a huge vessel also downed freight as the vessel freight came down. However, the major reason for the availability of containers is believed to be the global recession.
According to the official data released by the PIB in the month of October 2022, India’s merchandise export was negative compared to the same period last year. In October 2022, India’s export was to the tune of $29.78 billion which was $35.73 billion in October 2021.
Freight experts believe that the decline in export that started in October still continues. A leading custom house agent (CHA) in Ahmedabad, Samir Shah said, “According to my study, export went down worldwide across commodities and sectors.
The major exporters and importers are giving a negative forecast for 2023. The volumes dropped in every sector be it chemical or engineering. The shipping companies are currently waiting for the calls of exporters. The container price went down because of the demand-supply ratio.”
According to the experts in 2021-22, many countries made panic imports soon after markets opened, the buyers already have their inventory and are not even making normal buying.
Paresh Vasani, president of Rajkot engineering industry said, “The export declined by 15 to 20% in auto parts and all the other branches of engineering in the past two quarters.”
CEO of a Kutch-based company, which provides containers for export-import, Mithil Joshi said, “Vessel freight came down by nearly 50%, which also pushed down container freight. The inflated price of the container came down but is still 10 to 15 percent high than the pre-Covid levels.”
Nilay Choksi, a customs broker said, “Global trade was affected due to Covid restrictions in various countries and there was acute container shortage across the world. However, now rates have come down to almost pre covid levels. Variation and fluctuations in charges have affected various raw material prices as well.” Choksi added that there were instances where currently container charges were paid by the ports. “Singapore and Shanghai ports have shortage of containers and if we send more containers there, they are willing to pay for it.”
