Waiting time for access to containers increases as exports increases without any change in imports. An import-export mismatch creates a shortage of containers in India.
India’s exports witnessed an increase of 24% whereas imports decreased by 28% during July-September from a year earlier. Also, exports and imports in October fell by 5.4% and 11.26% respectively. Industry executives believe that the situation is likely to remain the same until February with Indian festivals on and Chinese New Year holidays approaching.
Why the Mismatch?
The containers which come in imports are used to export also. When business was not good at the peak of the COVID 19 lockdown, shipping lines had cut capacities. Also, souring trade relations with China delayed clearances of Chinese shipments. This led to a mismatch between exports and imports. Consequently, containers piled up at some ports creating scarcity at others. Sunil Vaswani, Executive director of Container Shipping Lines Association (CSLA), stated that shipping lines that used to send empty containers out had to reposition the containers at demand locations at a considerable cost. Prahlad Tanwar, a partner at KPMG, attributed the disruption in shipping, domestic manufacturing, and distribution schedules to the container shortage.
Experts believe that the pandemic has created a mismatch between the supply and demand of containers across the world. Prakash Tulsiani, the chief executive at Allcargo Logistics for the container freight station and inland container depot business, said that there was no port activity between March 23 and April 15. While exports started improving in May, imports showed no good signs. Besides, a ban on Chinese imports along with a 14-day quarantine on vessels further delayed the trade. Furthermore, new regulations like the implementation of the “Carotar Rules” allowed customs to check the antecedents of the importers, delaying the imports by more than ten days.
Citing the 50,000 long-standing containers waiting for clearance, the CSLA has suggested the government to clear these on a priority basis. It advised the government to destuff containers to warehouses and provide these to shipping lines. Further, it has asked to reduce the quarantine period on Chinese vessels to seven days. Also, it has suggested using railways for moving containers from ports to inland container depots free of cost. Besides, it has urged the government to increase the manufacture of containers locally.
In all, change in priorities of government and big global payers can help the port situation to improve gradually.