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Exports to US costlier due to port clogging, freight cost rise: TPCI
12 Aug '21
2 min read
Pic: Shutterstock
New records have been hit in container freight spot rates of all carriers as the Asia-Europe route rates continue to rise and are currently approaching $9,000 per twenty foot equivalent unit (TEU), with further rises expected this month, says the Trade Promotion Council of India (TPCI), which attributed the surge to clogging at major US ports, thereby disrupting the supply chain.
“The data from ITC Trade Map shows that, exports to US from India has grown by more than 20 per cent compared to the 2019 in the first quarter of 2021 (April- June period). A change in trend is being observed with respect to exports, which now is more focused towards the proximate markets, where the container turnaround time is shorter and freight costs are affordable, compared to the long haul distances like Europe and US. If this trend continues, India might see a decline in the exports in coming months as these are major markets of our exports,” TPCI said in a statement.
During pre-COVID days, cost out of India to North America was on an average $1,800 per TEU, but that has now touched $6,000 per TWU, according to SLT Food Inc’s Sandip Patel, a US-based TPCI member.
During the first trimester of 2021, the average prices for 20-feet containers across Europe rose by 57 per cent. A surge in demand along with unexpected high volumes and pandemic-related restrictions were the main difficulties that lead to this problem, Patel added.
The US West Coast (USWC) is the worst hit, witnessing a record breaking import volume, labour shortages and massive yard congestion. It is experiencing severe delays and long dwell times, said TPCI.
While the US East Coast (USEC) is witnessing an uptick in demand for imports, a lack of truckers and limited yard space and USEC terminals are experiencing heavy congestion and longer than usual dwell times.
The industry is also suffering from container companies’ own average delay, which has gone up by 160 per cent to 3.9 days.
The industry is worried that if this situation persists, there can be a 5-8 per cent increase in the cost of goods from India and the demand for Indian products may slow down.
“The data from ITC Trade Map shows that, exports to US from India has grown by more than 20 per cent compared to the 2019 in the first quarter of 2021 (April- June period). A change in trend is being observed with respect to exports, which now is more focused towards the proximate markets, where the container turnaround time is shorter and freight costs are affordable, compared to the long haul distances like Europe and US. If this trend continues, India might see a decline in the exports in coming months as these are major markets of our exports,” TPCI said in a statement.
During pre-COVID days, cost out of India to North America was on an average $1,800 per TEU, but that has now touched $6,000 per TWU, according to SLT Food Inc’s Sandip Patel, a US-based TPCI member.
During the first trimester of 2021, the average prices for 20-feet containers across Europe rose by 57 per cent. A surge in demand along with unexpected high volumes and pandemic-related restrictions were the main difficulties that lead to this problem, Patel added.
The US West Coast (USWC) is the worst hit, witnessing a record breaking import volume, labour shortages and massive yard congestion. It is experiencing severe delays and long dwell times, said TPCI.
While the US East Coast (USEC) is witnessing an uptick in demand for imports, a lack of truckers and limited yard space and USEC terminals are experiencing heavy congestion and longer than usual dwell times.
The industry is also suffering from container companies’ own average delay, which has gone up by 160 per cent to 3.9 days.
The industry is worried that if this situation persists, there can be a 5-8 per cent increase in the cost of goods from India and the demand for Indian products may slow down.
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