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Container shortage and high freight likely to affect India’s agricultural exports

Updated: Oct 10, 2021

Ocean freight has doubled and trebled because of a severe shortage of containers and delays have started affecting India’s export of major agricultural products like rice, grapes, cotton as also engineering goods. A decline in containers coming from China due to fall in imports from that country has boosted container shortages. “There is some shortage of containers due to which the shipping lines have increased the freight manifold. We have already approached the government about this problem and expect to get some relief,” said Vivek Kaul, chief executive officer, All India Rice Exporters Association (AIREA).

Cheaper Indian rice saw much demand from Middle East during the pandemic due to problems in rice production of countries like Thailand and Vietnam and helped increase Indian rice exports during the ongoing fiscal.

In a year when the export of basmati and non-basmati rice from India is expected to hit record levels, the container shortage is expected to get acute in the coming months. According to the estimate of AIREA, the industry expects to export another 2 million tonnes of basmati and about 3 million tonnes of non-basmati rice from now till end of the fiscal year in March, which will require 90,000 containers.

Shipping industry experts said a drastic fall in imports coming from China has led to shortages. “We have to wait for a few weeks to get a container at Kakinada port,” said Ramamurthy, an exporter of rice from Andhra Pradesh.

Kakidana port accounts for the largest volume of non-basamti rice export from India. Arun Chaphekar, managing director of Marine Lotus Company said due to problems at Sri Lanka’s Colombo port, which was the main transit point for the westward bound ships; now ports from south India like Chennai are being used as transit points. This has increased the business of Indian ports.

“However, the bottlenecks being faced in getting containers have hampered all types of exports including the engineering goods exports,” said Chaphekar. According to an analysis of pre-Covid and post-Covid freight done by AIREA, the freight for Europe has increased by 50% to 200% to various European ports. The increase in freight to the Americas ranges from 40% to 786% with the average increase of 299%. Freight to African ports that unloads the largest share of India’s rice export have gone up by 38% to 475%. The average freight increase for ships bound for West Asia is 243%, while the freight in Oceania has increased by 270% on an average.

Grape exports have the highest share in value terms among India’s horticulture exports. However, high shipping cost and subdued demand due to the lockdown in Europe, grape growers have decided to focus on the domestic market.

“The freight costs that are being quoted this year are way too high. We will rather try to focus on the domestic market,” said Vilas Shinde, chairman, Sahyadri Agro, the largest exporter of grapes in India.

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