Indian shippers and retailers suffer in a wave of supply chain disruption

Source: The Loadstar
Date: 30th May 2024

Indian manufacturers and retailers are struggling against an onslaught of supply chain disruption sweeping across Asian markets, threatening industrial and export trade growth in the emerging market.

According to updates from market sources, industrial supplies into India from the Far East have been hit hard by container shortages and soaring freight rates, on top of unpredictable delivery schedules.

“We are seeing considerable delays in the departure of our cargo from suppliers in the Far East,” one executive heading logistics operations at a major diversified group in Mumbai told The Loadstar.

The source explained that freight costs on the inbound leg had rocketed up to 150% for shipments booked under CFR [cost and freight] or CIF [cost, insurance and freight] contracts.

“For ex-works or FOB (free on board) loads, we are finding it difficult to get vessel space from Asian region ports,” said the executive. “Once the space is managed somehow, container availability becomes the next irritant.”

And containers stored in vendors’ sites have often attracted extra storage charges, according to the source.

Shippers also pointed to early signs of container equipment shortages for exports to Europe as demand picked up ahead of the traditional cycle for the upcoming holiday season. There is more pressure on 20ft standard boxes for factory export stuffing.

US president vowed to impose higher tariffs on an array of Chinese goods which some sources believed also played a part in pushing local suppliers to flush cargo out to avoid increased duty sparking a mad rush at load ports and trickle-down capacity pressures through the supply chain.

According to sources, Singapore Port has seen some 1,000 ship calls this month, up from about 600 last month.

India has lately been touted as an alternative sourcing destination amid the trade diversification from China. Thanks to New Delhi’s accelerated policy reforms and other incentive schemes, global investors – particularly in electronics verticals – have opened new production lines. However, China continues to be a hotspot for procuring raw materials and components for production and supply chain hiccups can complicate business target plans for “Make-in-India” stakeholders.

Despite New Delhi’s efforts to expand global market access, China continues to top India’s global trade chart. But industry analysts see India as a long-term potential beneficiary of the “China-plus-one” supply chain reconfiguration.

Real estate development heavyweight Jones Lang LaSalle today placed high bets on India. The head of operations and business development at JLL (India), said: “The Made-in-India initiative, industrial corridor development programs, production-linked incentives, semiconductor missions and (modified) national logistics programs have helped propel the India story globally.

“The country’s demographic dividend and, being one of the largest consumer markets in the world, makes India an attractive proposition over other Southeast Asian countries,” he added.

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