Container shortage hits foreign trade

2nd Wave of Covid-19: US and other countries impose restrictions on exports

Visakhapatnam: With pandemic-induced crisis in availability of containers, merchandise exports and imports from and to India were hit hard during FY 2020-21.

Container trade, which accounts for almost 85 per cent of movement of freight due to cost advantage, is falling down due to shortage in the availability of empty containers. This is mainly after the outbreak of Covid-19 in Wuhan of China, following which the United States and other countries started imposing restrictions on exports from the world's largest growing economy.

Incidentally, China handles almost 85 per cent of containers out of 17 million containers. India is one of the largest markets for exports and imports in Asia due to its strategic location, population and growing economy. Container trade contributes immensely towards achieving the foreign exchange. The Reserve Bank of India (RBI) has set a target of $1 trillion forex reserves by 2025. According to informed sources, due to the pandemic, the merchandise exports fell by 15 per cent. The service exports also bear the brunt of the pandemic with a fall by about 7 per cent. India's exports, according to conservative estimates, registered a downslide by 10.63 per cent during the first 11 months of the financial year.

In a chat with Bizz Buzz, Sridhar Lanka, Advisor to Andhra Pradesh Government on Industries & Commerce, said they were unveiling logistics policy shortly by focusing on manufacturing containers to overcome shortage. He said the government was keen on ensuring uninterrupted evacuation of cargo.

He said they were in consultation with the stakeholders and Industries Minister Mekapati Goutham Reddy was very keen to address the problem faced by the trade and commerce. He said as part of logistics policy, they would set up multi-modal logistics parks at all the port cities/towns. The Minister recently visited Delhi to meet Ministers concerned and CONCOR top brass to discuss about various solutions to overcome the problem.

Containers are available in 20 foot and 40 foot size and mainly handled by various container liners like Maersk, They mainly move bulk cargo along with pharma products, food grains and seafood in insulated reefers and other containers.

The shipping liners did not expect sudden rise in demand after rolling out of vaccine. While in India, the demand has gone up by an estimated 20 to 25 per cent, in China it is down by 40 to 45 per cent. From June onwards, the pressure may ease slowly from June, pointed out an official of Visakha Container Terminal Private Limited (VCTPL), a BOT operator at Visakhapatnam Port. The terminal has a natural depth of 16 metres, claimed to be the deepest in the country with a capacity of 0.55 million TEUs (twenty-foot equivalent units). It is under expansion to over 1.5 million TEUs at a cost of Rs.633 crore. "The trade is suffering a lot due to severe shortage in the availability of containers. It's becoming very expensive if hire an empty container from Colombo, Dubai or Singapore to meet our requirement," remarked Sudhir Mulagada, a prominent food grain exporter. He said the cost of containers depending on type of cargo and destination has gone up by 100 to 200 per cent during past few months entailing a heavy burden on them.