India faces container shortage due to export-import mismatch

The waiting time for access to a container for exporters our of India is now two-three weeks, compared with a maximum of four days earlier, said industry executives.

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A sudden improvement in exports and a slump in imports, especially from China, have created a shortage of containers for exports, said industry experts and company executives.

The waiting time for access to a container for exporters is now two-three weeks, compared with a maximum of four days earlier, said industry executives. The cycle is unlikely to be regularised until February, said industry executives.

During July-September, India’s exports in terms of volume grew 24% from a year earlier, even as imports reduced 28%. In October, exports fell by 5.4% and imports by 11.26%.

Usually, the same set of containers that come in as import shipments are shipped out for exports. During the peak of the lockdown when all trades were down, shipping lines had cut capacity and allied transportation systems like trucks were largely unavailable. Also, clearances, especially of Chinese shipments, took longer because of worsening trade relations between the countries. When exports rebounded and imports fell, it led to a pileup of containers in some ports and a scarcity in others.

“As a result, the shipping lines which until July 2020 used to ship out empty containers from India, had to start repositioning empty boxes into the country and move them inland to demand locations at a huge cost for the shipping lines,” Container Shipping Lines Association (CSLA) executive director Sunil Vaswani told ET.

“While India has a fairly balanced import-export container ratio, the availability and positioning of empty containers for exports is based on analysing historic trends and future projections across ports and customer catchments. The paralysis caused by the lockdown resulted in a pileup of export-import container operations compounded by disruption of shipping schedules and domestic manufacturing and distribution schedules,” said Prahlad Tanwar, a partner at consultancy firm KPMG.

It doesn’t help that there is a cascading effect of a global disruption in shipping lines, said Vaswani and Dhruv Kotak, managing director of JM Baxi, one of India’s oldest providers of shipping services.

“It’s absolutely wrong to attribute it to one party or segment or treat this like a problem unique to India. Containers are part of a wider global network,” said Kotak.

Congestion at transhipment ports like Colombo for instance adds further to the lead time. The rail-road system in the US too is currently congested, causing delays of up to two days per container. The impact on turnaround affects the eventual availability of boxes in other countries, including India.

“The pandemic led to widespread fears which arrested capacity. Shipping lines cut capacity by about 25%. Containers that came took time to get cleared. Almost no clearance happened between March 23 and April 15. Both affected the availability of containers,” said Prakash Tulsiani, the chief executive of the container freight station and inland container depot business at Allcargo Logistics.

“The entire thing snowballed into a big issue. Exports started improving in May itself but the non-availability of containers impacted numbers later,” he added.

Other factors included a ban on imports of certain Chinese goods, additional checks on Chinese shipments, a 14-day quarantine on vessels arriving from China, an overall negative sentiment among businessmen regarding trade with China, and new regulations like the implementation of the “Carotar Rules”, which allow customs to check the antecedents of the importers, have caused delays of 7-10 days in the assessment of the bills of entry and technical glitches in the clearance procedure implemented by customs officials.

The CSLA has given a number of suggestions to the government to resolve the issue.

“Currently there are about 50,000 long standing containers waiting to be cleared across the country, some of them for years together. These need to be cleared by customs on priority so that they can be made available by the shipping lines for exports,” said Vaswani.

The cargo should be destuffed in container freight stations/warehouses and auctioned thereafter, he said, adding: “Meanwhile, the boxes should be delivered to the shipping lines so that they can be made available for export shipments. This drive needs to be a consistent one and not just a one off knee-jerk reaction.”

The CSLA has suggested that the 14-day quarantine on Chinese shipments be reduced to seven days and that railways move containers from ports to inland container depots free of cost so as to reduce exporters costs of repositioning them. It has suggested that in the long term, the government encourage local manufacturing of containers.

The situation, meanwhile, is improving gradually.

Tulsiani said blank, or cancelled, sailing that had increased to 2-3 times a week in May was three time for all of September. The import-export cycle has started improving and ports and container freight stations are getting decongested. Also, a change in priorities on the part of big global players could change things more rapidly, said Kotak

“If a player such as Maersk were to reroute 50,000 containers from other hubs to India, the situation would improve much faster,” he said.

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