Now traders will end up paying more to export goods to global destinations
At a time when exports seem to be the only saving grace for the Indian economy, exporters are forced to shell out more to ship goods to global destinations.
Shipping companies have announced surcharges due to continued global disruption in container trade as a result of congestion at various ports. The proposed increase is between $ 500 and $ 1,500 per twenty foot equivalent unit (TEU), depending on the destination.
As of July 7, shipping rates from the ports of Nhava Sheva, Mundra and Hazira to the Mediterranean will see an increase of $ 500 per TEU, a notice from Hapag Lloyd said. Right now it costs $ 2,800 per TEU to Barcelona – an extra $ 500 would mean an 18% increase in shipping costs.
The French shipping group CMA CGM will apply a high season surcharge of $ 1,250 per TEU for dry cargo to the east coast of Central America, the Caribbean and the east coast of Mexico from India via Malta. Since it costs $ 5,500 per TEU to Buenos Aires from India, the surcharge is on top of the 23% shipping charge.
Blockade of the Suez Canal
Congestion has worsened after the blockade of the Suez Canal and the recent suspension of operations at the Yantian International Container Terminal (YICT) in China. Lars Jensen, an expert in the container shipping industry, in a post on social media, said YICT was operating at 30% capacity last month. It will take 82 days to clear the backlog there, Jensen said.
“Importers and exporters face enormous challenges related to port congestion and vessel availability. We have to pay three times the normal costs. It’s a huge burden for exporters like us who have already contracted prices with customers, ”said Sanjay Lulla, Managing Partner at SM Lulla Industries Worldwide, an exporter of leather garments.
An official at a shipping company said they were raising freight rates to trigger a steep rise in vessel costs. There is also a serious imbalance in equipment, he added.
Maersk, in a newsletter, said Covid-19 was undermining global plans and, at the same time, consumers started asking for more. The ripple effects of this situation are widespread and global trade does not have the resilience to respond to this additional pressure.