India Needs More Containers in Coastal Shipping to Avoid Repositioning Charges

An increase in the Drewry Freight Index indicates towards an increase in freight costs, opines Dr. Ajay Sahai, the DG and CEO of the Federation of Indian Exporters Organization (FIEO). He pointed at the necessity for supply of more shipping containers on the coastal routes to avoid repositioning charges.

While manufacturing of shipping containers is in progress in a major way at Bhavnagar, Gujarat, by many private companies, Sahai urged for meeting the demand for backward integration and local production of corrugated steel used in containers—a component not currently produced in India.

Dr.Sahai noted that the effect of the Red Sea crisis on insurance costs is not significant until shipments reach importers. Although few insurers in India offer cargo insurance, but the role of ECGC becomes significant when global liquidity comes down.

Highlighting that major companies like IKEA and Walmart have pre-negotiated and discounted contracts with shipping companies, he pointed out that shipping companies often recover losses from smaller exporters and suppliers when there’s a nomination involved. In opposition to the current losses borne by Indian exporters, he recommended tax concessions to attract global shipping lines to India by incentivising the registration of shipping vessels under the Indian flag. Sahai drew attention to China’s artificial lowering of product prices in areas where India has implemented PLI schemes. He advocated for an increase in Rupee trade, citing instances where Rupee payments have commenced in trade with Russia, UAE, and Sri Lanka.Stressing the importance of facilitating the supply of goods to India in Rupees and encouraging the use of available Rupees among global traders, he mentioned that some global suppliers of sunflower oil have agreed to trade in Rupees.