Exports to long-haul destinations such as the US and the EU may get hit in the coming months because of the rising freight costs and the longer dwell time for containers, the Trade Promotion Council of India has said.

While exports to the US from India have grown more than 20 per cent in the first quarter of 2021 (April-June) compared to the same period in 2019, a change in trend is being observed with exports now focussed more towards proximate markets where the container turnaround time is shorter and freight costs lower compared to the long distances like Europe and the US, per data from ITC Trade Map. TPCI is a trade and investment promotion organisation recognised and supported by the Commerce and Industry Ministry. “If this trend continues, India might see a decline in exports in coming months as these are major markets,” a TPCI statement warned.

New records

Container freight spot rates of all carriers have been hitting record highs, as demand on the Asia-Europe route continues to rise and is currently approaching $9,000 per TEU (Twenty Feet Equivalent Unit), with further rises expected this month, TPCI said.

Explaining the dynamics, the TPCI statement quoted Sandip Patel of SLT Food Inc; “The entire world bought medical protective equipment from China, but once those containers arrived and were unloaded in the US or European ports, and due to the lockdowns that those countries were experiencing, there was not enough merchandise produced that allowed those containers to be filled and shipped out. Meaning, empty containers ended up in places they were not needed, and they did not make it back to places they were supposed to.”

“During pre-Covid times, the cost out of India to North America averaged $1,800 per TEU, which has now touched a high of $6,000 per TEU, mainly on unexpected high volumes and pandemic-related curbs,” he said.

Freight from Mundra port in Gujarat to the US, which was $2,000-2,200 TEU six months ago, is today at $10,000-11,000 per TEU, Shrikant Devhitka, Export Sales Director at Savion Ceramic, was quoted as saying in the TPCI statement. “Our orders are getting diverted to Turkey and Spain as they are closer destinations to the export market.” he said.

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