Tag: container shortage

Container shortage: Average prices, one-way leasing rates skyrocket amid peak shipping season

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Rising average container prices and a massive increase in one-way pickup rates amid container shortage are pinching exporters and shippers in India at a time when the shipping season is at its peak, according to the monthly container logistics report by Container xChange, an operating platform for container logistic companies.

The report titled ‘Where Are All the Containers?’ shows that the average container prices increased by 58 percent last month as compared to June 2022 while the one-way pickup cost skyrocketed 200 percent in August from July.

July generally marks the beginning of the peak shipping season.

“India has withered the rising global disruptions with more resilience than many other countries. However, the ripple effect of disruptions caused well over the past two years has caused significant market and container imbalances in the Indian shipping industry,” said the report.

Amid global container shortage as demand surged after the pandemic, the government is in the process of coming up with a roadmap to boost container manufacturing in the country with a cluster-based approach, media reports said earlier.

“India’s decision to expand its container manufacturing will come on an opportune time. Expanding domestic manufacturing will help ease the strain and make containers available for other nations despite containers being stuck at western countries and China,” said Christian Roeloffs, Cofounder and CEO, Container xChange.

Average container prices up significantly since pandemic

According to the report, India has been appearing on the list of costliest ports for both 20 ft DCs (dry containers) as well as 40 ft HCs (high cube containers).

While the average rates for 20 ft DCs have gone up by 61.15 percent from $900 in July 2020 to $2317 in July 2022, prices for 40 ft HCs have risen by 57.34 percent from $1800 in July 2020 to $2317 in July 2022.

“The country has a vast coastline, and this gives it a very good opportunity to expand its shipping economy. However, there are many roadblocks, hinterland transportation being one, cost of containers being another. Our platform always shows Indian ports as one of the costlier ports. This is also because there are many charges that make the movement of containers costlier from India,” it said.

However, the average trading prices for these boxes, for cargo-worthy 20 ft DCs, in Mundra, Nhava Sheva, and Chennai fell marginally to $2384, $2362, and $2356.

On the other hand, for cargo-worthy 40 ft HCs, the trading prices dropped sharply in Mumbai and Mundra by 5.51 percent to $3773 and 8.85 percent to $3,605, respectively.

“As the sailing disruptions followed by container shortages continue this year, many shipping lines have skipped India port calls to maintain schedule integrity. This has subsequently affected the demand and has further led to a gradual yet marginal decline in average prices for cargo-worthy containers,” said the report.

For leasing boxes from China to India, users had to pay $187.5 for 20DCs and $175 for 40HCs in July, it added.

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India’s exporters continue to reel under container shortage, despite additional measures

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Despite additional measures taken by the world’s shipping lines to help India’s economic recovery, container shortage continues to haunt exporters. Though not as much as it would have in the absence of the additional measures.

Maersk, the world’s largest shipping line, moved over 2.15 lakh empty containers from locations of surplus to the deficit locations from January-August 2021, The Hindu BusinessLine reported. However, the container shortage still continues to undermine the country’s exporters. And it might get worse during the upcoming festive season.

“Maersk has repositioned empty containers like never before; 215,000 containers repositioned in the first eight months of 2021 into India to support economic growth,” Maersk said in its monthly market update.

In countries with more exports than imports, the pandemic has severely impacted container shipping and global supply chains. Congestion at ports Asia, Europe, and Asia, disrupted sailing schedules, and container shortage in exporting countries have created severe disruptions, Maersk said.

In the first half of 2021, India’s exports were 40 percent higher than its imports. Higher exports mean more containers. But as the world reels under the shortage of containers after demand revived in the post-pandemic period, shipping lines have run out of containers.

The global economy remains robust; however, IHS Markit’s PMI manufacturing indicators suggest the pace of recovery has softened a bit. Inventory levels in the US and Europe are at their lowest levels. “This means even once retail demand declines, we will see cargo volumes continue to remain strong as inventory levels need to be rebuilt,” it said.

Also read | Centre takes steps to provide relief to exporters facing global container shortage

Shipping companies are trying hard not to impede India’s economic recovery. Several other shipping lines have repositioned containers. And Maersk has introduced over six lakh new containers since July 2020, The Hindu BusinessLine reported. While these efforts have partially pulled India out of the glut, exporters are still suffering.

“We have tripled the number of dry freight containers in our fleet during the last few months to support our customers’ export requirements,” Maersk said. However, increasing the number of containers is no longer sufficient to meet the overall demand. So “it remains critically important that import containers are turned around as quickly as possible.”

Besides, the companies are also trying to reduce the dwell time. Dwell time is the time containers spend waiting for the transport. Reducing dwell time means the containers can be freed up sooner for other cargoes.

Maersk sees container shortage increasing as “China’s October Golden Week, Christmas, and Chinese New Year will bolster demand for container shipping for the last quarter of 2021,” it said.

Also Read | Explained: The international container shortage; its impact on Indian traders

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CONCOR has not increased fares despite container shortage, says CMD

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India has taken steps to provide relief to the exporters facing global container shortages, including giving priority to containers basis the efficiency of the movement.

Once stuffed, containers would be moved on priority on the basis of efficiency in the movement to the port to find a vessel at the earlier for better turnaround time, the Centre said in a statement.

Disruptions due to the COVID-19 pandemic resulted in high shipping freight rates and a global container shortage. “A lot of empty containers are being repositioned into India, but they are not sufficient for our export volumes because imports have come down,” V Kalyana Rama, CMD of Container Corporation of India (CONCOR) told CNBC-TV18.

Originally, we used to have more imports and lesser exports. But this time because imports have come down and exports picked up there is an imbalance on the export side now.

“I think the disruptions happening on the China-US routes, which some reports today say there are many ships waiting at China, these things are causing a lot of effect on our export volumes as well as the empty container repositioning into India,” he said.

Kalyan Rama thinks this shortage will continue till the end of this financial year. “So there will be continuous shortage among exporters and then a lot of demand for the export containers,” he added.

For full management commentary, watch the video.

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Gujarat Pipavav sees growth in container volume; aims to become pioneer in DFC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The world is witnessing the big container shortage issue. High demand for containers has also led to a continuous rise in freight rates. Jakob Friis Sorensen, managing director at Gujarat Pipavav Port, discussed the current situation and the outlook.

“It is quite a structural problem that has been with us now for many months. And it looks like it’s going to take some time to even out, so it is a problem. It’s not something that’s only hitting India, it’s hitting everywhere. It’s not easy just to have a silver bullet solution to how this is being solved,” he said.

Also Read: Rise in dry bulk freight rates highest in last 10 yrs; Covid protocols disrupting supply chains: GE Shipping

The Dedicated Freight Corridor (DFC) is giving some relief to the stress that people are currently experiencing. “We are looking at the upsides that we can provide and helping out the industry. So, we can run engines, we can run electric trains now from Pipavav to the northern market in Delhi in around 24 hours, which is fantastic,” he noted.

Gujarat Pipavav has lined up Rs 700 crore for organic expansion, for getting newer cranes and also to get the container yard modified. “We have plenty of room to grow organically. And again, I have to mention that we will be the pioneers in the DFC and that is something we are putting a lot of energy into, because it would really be a game changer for Indian import and export supply chain,” he said.

The company has also grown in container volumes in Pipavav. “Our bulk volumes, both on the dry bulk, but certainly also now, liquids such as LPG have been fantastic in the month of August. So I would say we are firing on all cylinders. It’s going to be a lot of work and several months ahead of us is going to be focusing on this recovery, but at least things are going in the right direction – the volumes, both import and export are actually going in the right direction,” he mentioned.

Also Read: High shipping rates due to demand/supply disruption in container business: Gujarat Pipavav Port

In the month of May, cyclone Tauktae hit Pipavav very badly. “It took us out of operation for a couple of weeks. If we didn’t have that natural disaster, I would say that we would beat the former financial year. But there is some extraordinary impact to the cyclone, so we are now doing upgrades of our infrastructure and maintenance and repair. But that is coming back. We will probably be slightly better than last year,” Sorensen shared.

For the full interview, watch the accompanying video.

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Rise in dry bulk freight rates highest in last 10 yrs; Covid protocols disrupting supply chains: GE Shipping

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The ocean freight rates have risen three-fold in the last six months. The cost of freight from China is up 200 percent. G Shivakumar, Executive Director and CFO of GE Shipping shared his outlook on the situation.

“The headlines are being hit more by the container sector but to a slightly lesser extent we have seen dry bulk freight rates move up very significantly in the last few months as well,” he said.

30 percent of GE Shipping’s ships are dry bulk ships and they have been seeing rates higher than seen any time in the last 10 years.

Demand for the carriage of dry bulk cargo has gone up by 6 percent year-on-year (YoY), the fleet has gone up by 3 percent in the same period leading to tightening in the markets.

Also Read: High shipping rates due to demand/supply disruption in container business: Gujarat Pipavav Port

“We also have inefficiencies in the supply chain, which are caused by the COVID-19 protocols, which are in place at various ports. There is a lot of confusion and each of the ports – especially in the importing countries in the far east – tend to change and have stricter protocols on COVID-19, which is making everything less efficient than it used to be,” he said.

“Some ports in China have restricted the number of people who can come onboard the ship and to discharge a bulk carrier, you need quite a few people to come onboard. It means that you are going to take two-three days extra to discharge the ship. In one voyage which is 50-100 days, that is to do 4 percent which is gone in capacity, which means that the market is going to get tighter. That is what has made the dry bulk freight rates shoot past their 10-year highs,” he noted.

Out of 14 ships, two ships are on fixed-rate contracts. The remaining 12 ships are exposed to the spot market. So, they keep getting repriced every so often. “12 ships exposed to the spot market and enjoying the current spot market,” he said.

In terms of current spot freight rates, he shared, “These are about 9-12 months contracts. So, it would probably be somewhere around 80-100 percent higher than those rates. The spot rates are more than twice sometimes thrice as much as the rates those ships are fixed.”

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On oil demand, he said, “Five of our ships are LPG ships. They are all on time charter. That market is doing quite well and the rates are fixed at pretty profitable levels. Remaining 27 vessels, which are tankers, crude and product tankers, the rates have been terrible for the last 12 months or so. Basically, oil demand has not yet recovered even to its level of 2019.”

For the full interview, watch the accompanying video.

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While India’s exports are doing well, container shortage is cause of concern, says FIEO

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shortage of shipping containers triggered by massive congestion at Chinese ports is giving Indian exporters nightmares. Exporters across product categories are staring at a slump in exports as container charges reach record levels.

In an interview with Ashmit Kumar, Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations (FIEO), said, “Since the last few months we are seeing the shortage of container and it has aggravated now. The main problem is for the low-value high-volume cargos because they are not in a position to get the container and also the freight has skyrocketed for them and we are seeing a huge decline in export of granite, marble and furniture. While India’s exports are doing extremely well, this is something which is a cause of concern for us.”

He said the government needs to ensure that not many empty containers are exported out of India.

“We have suggested to the government to ensure that not many empty containers are exported out of India because in some ports we are seeing a large number of empty containers going out of India and that also affects us. Also, a significant number of containers have been stuck up because either the boaters have not taken delivery of the container or they have disputes with the authorities. If we can quickly offload the cargo of the container in some public bonded warehouse then these containers can be added to the supply to soften some of the problems. We have also requested the government to get in touch with the shipping lines so that additional 1 lakh containers can be brought in India to ease it.”

Watch video for more.

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European container market seeing demand uptick: Gujarat Pipavav Port

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gujarat Pipavav reported its Q1FY22 numbers. The company had undertaken a 10-day voluntary shut down as a precautionary measure ahead of cyclone Tauktae, which resulted in a loss of market share. Jakob Friis Sorensen, Managing Director at Gujarat Pipavav Port, discussed the performance.

The weakness in volumes is because of the cyclone and partly also because of some of the structural problems that India is facing in the global container market where the supply and demand is a bit skewed, he said.

“We have had a tremendous recovery and the entire team worked tirelessly to recover and to be up and running in full speed again,” he mentioned.

“We had hoped that stabilisation would happen during 2021, but it seems that this Asia to Europe and Asia to transpacific is continuing perhaps well into 2022. So that means higher prices for container shipping, but it also means that demand is strong in those markets. It plays both ways for Indian exports,” he added.

According to him, container demand/supply challenges have peaked. “Europe and many other places are coming back to normal; it is going well with the vaccination programme and it means that we are slowly getting a little bit back to normal,” he shared.

“What we have seen in Pipavav is that our non-container activities – bulk liquid, even export of cars – have resumed, so we are quite optimistic that it is evening out but it is going to take a longer time, probably the end of 2021 into next year, before we see relative normal pricing again,” he stated.

On the container side, the port is losing a little bit of market share mainly because of the cyclone, he said.

For the full interview, watch the accompanying video.

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Container shortage continues; industry coping better: Volvo Eicher

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The shortage of containers for exports has been a big problem for auto original equipment manufacturers (OEMs). SS Gill, Senior VP and Head-International Business at Volvo Eicher said that the difficulty remains, but companies are trying workarounds.

“The container shortage situation is not yet resolved” Gill said in an interview with CNBC-TV18.

“As the exports are rising, the business is picking up. There are ways and means that people have found to manage the entire situation,” he said, adding that the present challenge was a good opportunity to improve efficiencies.

“This is also an opportunity for India as a country to even think of starting manufacturing those containers,” he shared.

Gill said demand had almost returned to pre-COVID levels.

“We are seeing the demand picking up because we are supplying trucks and buses to about 34 countries in the developing world. So in the developing countries overall, the demand is still reasonably okay. It is something like pre-COVID level,” he said.

“Apart from the passenger bus segment, most of the other segments have started seeing good traction and we have seen the last five months better than the previous year,” he stated.

On revenues, he said, “It would be somewhere between the last peak of FY19 and FY18 – somewhere around that is what we are looking at even in the export markets.”

For full interview, watch the video…

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow