Shipping companies have hiked rates substantially, hurting Indian trade both exports and imports. The impact has been felt across industries, including engineering, auto components, chemicals, electronics, and pharma. Industry sources said sea freight charges to European destinations increased by 60% in the last few months, with costs rising by 20-30% in October alone. Over the same period, sea freight rates to Latin American ports rose by 50%. Shipping rates to the US and other destinations also hiked significantly. Meanwhile, air freight rates were also up by 30-40% due to reduced international flights caused by the pandemic.
According to Sharad Kumar Saraf, the chairman of the Federation of Indian Export Organisations (FIEO), exporters face more severe impact than importers, as they struggled with a massive shortage of containers due to lower imports in the last several months. Saraf said that the sharp increase in freight rates indicated unfair and monopolistic trade practices.
Dinesh Dua, the head of the Pharmaceutical Export Promotion Council of India (Pharmexcil), said container shortages also occurred at regular ports such as Nhava Sheva and Mundra. Dua added that there was also a massive hold-up of shipments in inland container depots. Mahesh H Doshi, who led the Indian Drug Manufacturers’ Association (IDMA), also raised similar concerns about the ballooning sea and air freight costs.
In addition, the teething issues in the initial implementation of the Faceless, Contactless, Paperless Customs initiative have resulted in delays in export and import customs clearances in India. Saraf said aid businesses across industries reported severe delays in export and import customs clearances in the last 15-20 days. Importers said consignments are usually cleared in 48 hours, but the process could take up to five days under the new system.
The industry had urged the authorities to resolve the troubles. Their letter sent to the Directorate General Shipping raised concerns about alleged cartels formed by shipping companies. Steve Felder from the logistics company Maersk (South Asia) said the current high freight rates were a result of supply shortages due to an imbalance between imports and exports. He said that Maersk needed to position its vessels across India which add to total logistics costs.
