KARUR: Industrialists of Karur district have raised concern over the drastic rise in shipping charges of finished products owing to shortage of containers in shipping companies worldwide. Even as things are returning to normal after the pandemic, Indian exporters are facing a crisis in getting empty containers to send their finished goods to European nations and North and South American countries.
Karur, which is one of the vital industrial hubs in Tamil Nadu is famous across the globe for its household textiles and decorative items, including curtains, cushions, pillowcases, bedspreads, blankets and table covers. Around 90 per cent of the products manufactured here are exported to foreign countries. In this situation, the shipping companies across the world have increased their freight charges drastically, which has left the exporters and manufacturers in distress.
Karur export industries carry out trade of around Rs 3,500 crore a year.
"The top 10 shipping companies in the world, including APM-Maersk, MSC (Mediterranean Shipping Company), CMA-CGM, ONE (Ocean Network Express) line, Hapag-Llyod, Evergreen line and HMM, have raised their charges by whopping 400 per cent," said Dr Stiffen Babu, a household textile exporter from Karur.
"From January to April, the finished goods which we sent from Chennai or Thoothukudi harbour to the Hamburg port in Germany would cost around $1,500 to $2,000 for a 40-ft container. Now, it has touched $8,000. This applies for all the European countries, including Germany, Italy, Spain, England, Sweden and Denmark, among others. Also, charges for shipping our goods to New York port, which cost $3,000 earlier, now cost between $15,000 and $17,000. The companies have cited a shortage in containers for the drastic rise in the freight charges," Babu added.
Although the importer bears 90 per cent of the cost for shipping the goods, the price hike has affected them a lot. "Foreign buyers have reduced their orders and some have even cancelled a orders. Goods worth around Rs 200 crore have piled up across the Karur industries owing to container scarcity. The Ministry of Shipping, Commerce and Textile must immediately intervene and sort out this issue by holding talks with the shipping companies," Babu said.
Karur Textile Manufacturer Exporters' Association honorary president Atlas Nachimuthu told TNIE, "Container shortage and increased freight rates compound exporters' shipping woes. Currently, there is a backlog of two to three weeks of vessel berthing at the US ports. Due to this, there is heavy congestion at the ports and vessels are not able to discharge and pick up the empty containers. Recently, due to Covid-19 outbreak at three ports in China, the Chinese government laid down strict restrictions for vessels to enter the ports. They made 21 days compulsory quarantine period for the vessels, which led to queuing. These are reasons for container shortage as there is imbalance in container inflow and outflow from the ports of US and China. For these delays, the shipping lines are forced to pay detention charges and demurrage to the port authorities, which ends in increase in container freight rates. Exporters are facing challenges to ship the finished goods and there is space congestion at warehouses."