The acute inventory (container) shortage facing Indian exporters can be reduced by half if the shippers (exporters) and consignees (importers) agree to shorten the free period for boxes to 3-7 days from 14-21 days, shipping industry sources said.

The free period, also known as ‘line detention’ in shipping, allows a cargo-laden container to be shifted to a container freight station (CFS) after unloading from a ship where it lies for 14-21 days at the expense of the carrier.

If the free period is reduced to seven or three days, the turnaround of containers will be faster and inventory will become available, the sources said.

Referring to the recent outburst from exporters on equipment shortages and rising freight rates, the sources said: “Those complaining about inventory shortage and freight rates going up are partly responsible for this situation. They want to use the cargo container as a warehouse. Reefer (refrigerated) containers are asking for 7-10 days line detention”.

While the impact of the free period and its effect on cargo clearance was prevalent even before the outbreak of Covid-19, the situation has become “worse” now with the industry facing inventory shortages. “They should consciously reduce the free period and clear cargo immediately. They want somebody else’s container to be used as a warehouse and want to cry also,” the sources said.

“Free period has now become a birth right. If they find there is inventory shortage, they should release the container fast, then the turnaround will be faster and inventory will be available and 50 per cent of the inventory shortage can be reduced by reducing the free period,” the sources said.

Shipping lines are also reluctant to give customers containers for the Far East and South-East Asian trade lane.

Lines prefer to re-position empties from India to China rather than give a 14-21 day free period and earn very nominal freight charges of $80-90 per container from India to the Far East and South-East Asia.

“Lines are saying let us reposition our empties back to China and earn more freight revenue on the return leg from China. That is also hurting Indian exporters as containers are getting re-positioned and they are not able to get containers,” the sources said.

Indian exporters and consignees should desist from asking for longer free period for containers, only then will the inventory position will improve, they added.

Related Topics