Container Shortage and Rising Logistics Costs Affect Automotive Exports: ACMA
Chennai: Over-reliance on Chinese container manufacturers and foreign shipping companies is starting to weigh on the auto industry, with container availability and cost becoming a problem for auto exporters.
Last week, TVS chairman Venu Srinivasan said the company’s first-quarter exports of two-wheelers were affected by the availability of containers. On Tuesday, Deepak Jain, chairman of the Indian Association of Automotive Component Manufacturers (ACMA), said automotive component exporters were facing a “4 to 6-fold increase in logistics costs due to the container problem.”
The ACMA reported that component exports fell 8% in FY21 from a year earlier, although the good news is that exports to China saw a slight increase.
“The container shortage started in the second half of FY21, but now the pinch has deepened and rates for a 40ft container to the United States have dropped from $ 2,000 last year to $ 6. $ 000 now, “Jain said. “A 40-foot container to the EU cost $ 1,500, which is now $ 5,000. Since the US and the EU are our main export destinations, this has hit exporters hard, ”he added.
Component exports from India fell (for the second year in a row) by 8%, from $ 14.5 billion in fiscal year 20 to $ 13.3 billion in fiscal year 21. It was $ 15.2 billion in FY19. India’s main export destinations are the United States, Germany, Thailand, Turkey, and the United Kingdom.
Exports to the United States (26% of total exports) fell 6%, from $ 3.7 billion to $ 3.5 billion. Europe is also down 4%, from $ 4.36 billion to $ 4.2 billion.
The good news is that China entered the top 10 export destinations with $ 360 million in Indian exports, up 14% from $ 320 million in FY20.
According to Jain, the container shortage hits Indian exporters more because “container services to and from India are dependent on foreign shipping companies and container manufacturing is completely dependent on China,” he said. .
The current waiting period for a container is now 1 to 2 weeks, compared to only 24 to 48 hours previously.