The Trade Bodies/Export Promotion Councils can collect data from their respective members and furnish realistic advance projections of exports, origin/destination-wise, along with the type of equipment required, for at least an 8-12 week period, to the shipping lines, to enable them to try and arrange for empty containers accordingly.
This year the pandemic has created unprecedented circumstances for the trade globally. The shipping lines on their part have kept servicing the trade with vessel calls despite exports having been practically non-existent during the lockdown. Besides, the lines also independently offered extended free time on import containers and did all that they could to keep the supply chains functioning.
The pandemic has nevertheless distorted the demand & supply situation globally. From India’s perspective, the trade which was dominated by imports has seen a sudden surge in exports and a drastic reduction in imports, something that no one had really anticipated. The reduction in India’s imports from China has had a major impact on the availability of containers for exports. This has created a major imbalance in the equipment situation. During the period July / Sept 2020, India’s exports in terms of volumes grew by 24 pct while its imports reduced by 28 pct compared to the same period in 2019. As a result, the shipping lines which until July 2020 used to ship out empty containers from India, had to start repositioning empty containers into the country and move them inland to demand locations at a huge cost for the shipping lines.
This distortion in demand & supply, with its resultant impact on costs & rates, has not happened just in the case of India but in the case of the rest of the world too. Besides, this is not just unique to container shipping but applies to air freight as well. Congestion at transshipment ports like Colombo for instance only 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. With the kind of throughputs the US has, the effect on the turnaround time of containers in totality is significant, which in turn adversely impacts the eventual availability of boxes in other countries including India.
Under the circumstances, the Container Shipping Lines Association (India), also known as CSLA, has offered some suggestions to the government to help improve the situation.
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. The cargo should be de-stuffed in the CFSs/ warehouses and auctioned thereafter. 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 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, resulting in slow clearance and return of empty containers to the lines. Added to this is the delay caused by the Faceless Clearance introduced by Customs which takes up to 6 / 7 days to clear a Bill of Entry. This aggravates the shortage of containers for exports.
Associations like FIEO have gone a step further to suggest to the government that the shipping lines reduce the free time on import containers so that empty containers could be made available for exports faster.
The 14 day quarantine imposed on vessels arriving from Chinese Ports has resulted in their having to wait for up to 3 to 4 days before berthing at Indian ports. This not only delays the discharge and the destuffing of import loads but also delays the availability of containers for export shipments. On a continuous basis, this delays the whole cycle of several sailings put together and eventually results in a reduction in the number of sailings over a period of time and thereby causes a significant reduction in the number of export shipments being effected. The quarantine period for vessels arriving from Chinese ports therefore needs to be reduced to 7 days as in the case of vessels arriving from other countries.
It would also help if the railways moved empty containers from Ports to ICDs free of cost so as to help reduce the empty repositioning cost for the exporters in the hinterland. Besides, the benefit of the 5% reduction in the freight for loaded containers announced by the railways should be passed on to the shipping lines/end users.
From the country’s standpoint, it is also recommended that India start manufacturing marine containers within the country. This would assist in the security of supply chains for exports. As a matter of fact, the government could consider starting manufacture of containers at Govt Shipyards which already have the equipment and the expertise to do so. The government would have to make this business viable though through the lifting of fiscal hurdles.
In the meanwhile, at a time when the position of both space and equipment is tight, it would help if the Trade Bodies / Export Promotion Councils collected data from their respective members and furnished realistic advance projections of exports, origin/destination-wise, along with the type of equipment required, for at least an 8-12 week period, to the shipping lines, to enable them to try and arrange for empty containers accordingly.
The current situation is not expected to last permanently but is unlikely to change overnight either. The CSLA member lines, in the meanwhile, have offered to do their best to co-operate with the government and assist the trade to help meet their export commitments.
