Government intervenes as shipping shocks expose container vulnerability
In a normal year, Iran buys almost 4.5 million tonnes of basmati rice from India. “It is difficult for the ships to pass through the
In a normal year, Iran buys almost 4.5 million tonnes of basmati rice from India. “It is difficult for the ships to pass through the Strait of Hormuz now. Availability of vessels from Kandla or Mumbai to Iran is very poor,” says Prem Garg, president of the Indian Rice Exporters Federation. A 20-foot container carrying 26.5 tonnes of rice now costs about $5,000 to book. “But we never know when a vessel will be available,” he says. The uncertainty carries a steep price. R. Rajeshkumar, president of the Custom Broker and Shipping Agents Association, Coimbatore, recalls a customer who booked a container from Kochi to Iraq for $1,500. With the West Asia conflict stranding empty containers at major ports, procuring an empty container eventually cost $50,000. Coffee exporters face similar disruption. Most Indian coffee containers now travel around the Cape of Good Hope instead of through the Red Sea and Suez Canal, says Ramesh Rajah, president of the Coffee Exporters Association of India. The diversion adds 10 to 22 sailing days and several thousand nautical miles. Freight per container has climbed from about $1,200 before the crisis to $3,800 because of the detour, while international buyers continue insisting on pre-contracted freight rates. Across sectors, exporters are grappling with container shortages, fewer mother vessels and soaring freight costs.
Large container ships that once called at Thoothukudi and Kochi have steadily declined since Covid. Instead, vessels carrying up to 20,000 containers now mostly dock at Nhava Sheva. “The freight cost from Nhava Sheva is almost 50% less compared with the ports in the south, and the time taken is also less,” says P. Subramaniam, former Coimbatore president of the Customs Broker Association. As a result, more than 40% of cargo that once moved through Thoothukudi or Kochi has shifted to Nhava Sheva. Infra constraints Infrastructure constraints have compounded the problem. Vallarpadam is still some years away from becoming fully operational. Thoothukudi will be able to handle larger mother vessels only after completion of its ₹15,000 crore Outer Harbour Project. Vizhinjam, meanwhile, remains focused largely on EXIM cargo because of connectivity limitations. Freight rates continue to surge. Shipping a container from Kochi to Jebel Ali has risen from $1,000-1,500 to nearly $7,000, increasing by roughly $500 in just the last three days. Rajeshkumar says Chinese exporters secure containers more easily because of stronger demand, while Indian exporters pay heavily to book containers or recover empty ones stranded at hubs such as Dubai, Khor Fakkan and Sohar. The problem is structural, says Amitabh Kumar, former Director General of Shipping. India has weathered five major shipping disruptions this decade — COVID, the Suez Canal blockage, the Ukraine war, Houthi attacks in the Red Sea and now tensions around the Strait of Hormuz.
The BriefWire