Exporters face fresh twist from foreign friends

Exporters in India are grappling with a new challenge as congestion at transhipment ports in Singapore and Colombo is causing a ripple effect throughout the country. The surge in China-US trade is exacerbating the issue, with more containers being deployed between the two trading powerhouses and reducing availability for other exporters.

This trend is driving up freight rates globally, with a 40-foot container between Shanghai and Los Angeles seeing a 133% increase to $5,894 last week, and a 106% rise to $7,893 for the route between Shanghai and New York. "Chinese players are frontloading their American exports ahead of the Christmas rush," a sector watcher noted.

This has led to a global container supply crunch, as Chinese exports to the US grew by 17% in July compared to the previous year, while imports rose by 15%. Domestic traders have also reported a container imbalance fee being levied, with shipping lines "charging whatever they like." However, Sunil Vaswani, executive director at the Container Shipping Lines Association, has denied claims of container shortages, stating that there is congestion at transhipment ports that could be causing delays.

The lack of feeder vessels is also causing problems, as Sunil Vaswani from a Chennai-based packaging producer explained that routing has become longer, with containers waiting for 15-20 days in Singapore instead of the usual three to four days. This congestion is not limited to Singapore and Colombo, as heavy delays are also being reported at ports in Cochin and Tuticorin.

The freight rates are changing daily, and transit times have significantly increased. The Jebel Ali port in West Asia, the largest man-made harbor and busiest container port, has been offline since the Iran War escalated, causing a wider redrawing of supply chains.