global container shortage Archives

Indian automakers fear container shortage to hit parts supply, output

Automakers in India are bracing for a parts shortage and possible production losses over the next 3-4 months due to a global shortage of available shipping containers. The concern was put forth by the Society of Indian Automobile Manufacturers (SIAM). The trade body stated that shipping freight rates have surged since July and companies are now finding it difficult to sustain normal trade operations. Major auto exporters also have to book containers weeks in advance.

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Aurobindo Pharma & COVAXX to develop Covid-19 vaccine for India, UNICEF

Aurobindo Pharma Ltd has entered into an exclusive licensing agreement with US-based COVAXX to develop, commercialize, and manufacture UB-612 for India and the United Nations Children’s Fund (UNICEF). UB-612 is the first Multitope Peptide-based vaccine to fight Covid-19. COVAXX is currently conducting a Phase-1 clinical trial for the vaccine candidate. Aurobindo Pharma will manufacture the finished doses of UB-612 at its facilities in Hyderabad.

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Adani Power terminates pact to buy 49% stake in Odisha Power Gen Corp

Adani Power, on Thursday, said that the agreement to acquire a 49% stake in Odisha Power Generation Corporation (OPGC) from the affiliates of the AES Corporation has been formally terminated. The Odisha government, which holds a 51% stake in OPGC, had exercised the Right of First Refusal (RoFR) to purchase the 49% stake held by AES. In June 2020, Adani Power had announced a share sale and purchase agreement (SSPA) to acquire a total of 89.3 lakh equity shares (or 49% stake) in OPGC from AES OPGC Holding and AES India Pvt Ltd.

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SpiceJet partners with GMR Hyderabad Air Cargo for Covid-19 vaccine delivery

SpiceJet Ltd announced that it has signed a Memorandum of Understanding (MoU) with GMR Hyderabad Air Cargo (GHAC) to provide cargo services to all vaccine manufacturers in the region. SpiceXpress, the cargo arm of SpiceJet, aims to provide the first-mile pickup and last-mile delivery to carry Covid-19 vaccines across the domestic and international markets. Under the MoU, GHAC will provide the required space for SpiceJet’s vaccine shipments and also train its personnel on the handling of the vaccine.

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Vodafone Idea, Airtel file segmented offer details to TRAI

Vodafone Idea and Bharti Airtel have both complied with the telecom regulator’s (TRAI) recent directive and filed details of all their segmented offers made between January and November 2020. On December 4, TRAI had directed all telecom companies to submit details of all segmented offers made between January and November 2020, including offer name, tariff rates, terms and conditions, validity spans, and benefits- within 15 days. TRAI stated that such disclosures would need to be made on a monthly basis for each service area.

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India challenges Vodafone arbitration ruling in Singapore: Report

According to a report from ET, the Indian Government has challenged the international arbitration court’s ruling in favour of Vodafone Plc in the retrospective tax case. In September 2020, Vodafone had won the long-pending arbitration case against India’s income tax (IT) department that demanded over Rs 22,000 crore on a retrospective basis. The tribunal, in its ruling, had said the government must cease seeking dues from Vodafone and pay more than Rs 40 crore to the company as partial compensation for its legal costs.

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Govt of Himachal Pradesh allots three hydro projects to SJVN

The Government of Himachal Pradesh has allotted three hydro projects of 501 MW capacity in Chenab Basin to SJVN Ltd. In a Cabinet meeting held today (which was chaired by CM Jai Ram Thakur), SJVN was allocated 104 MW Tandi, 130 MW Rashil, and 267 MW Sach Khas Hydro Electric Projects in the Chenab Basin. With the allocation of these three projects, SJVN has now secured six projects with a total capacity of 1279 MW in the Chenab Basin.

Lupin gets tentative nod from USFDA for toenail fungus topical treatment solution

Lupin Ltd announced that it has received tentative nod from the US Food & Drug Administration (USFDA) to market generic Efinaconazole topical solution 10%. The solution is used for treatment of fungal infections of toenails. The product is a generic version of Bausch Health Americas Inc’s Jublia topical solution of the same strength. According to IQVIA MAT September 2020 data, Efinaconazole topical solution 10% had an estimated annual sales of $222.9 million (~Rs 1,640 crore) in the US.

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Central Bank to exit housing finance business; to sell JV stake for Rs 160 crore

Central Bank of India will exit its housing finance joint venture, CBHFL, by selling its entire stake of over 64% to Centrum Housing Finance. Centrum Capital, which is the parent of Centrum Housing, stated that the cost of the acquisition is about Rs 160 crore. Centrum Capital said the deal is expected to be closed in about 2-3 months. CBHFL is a financing and mortgage company jointly promoted by four public sector institutions – Central Bank of India, National Housing Bank, Specified Undertaking of Unit Trust of India (SUTTI), and Housing and Urban Development Corporation (HUDCO).

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Caplin Point receives approval from USFDA for anesthetic injection

Caplin Point Laboratories stated that its subsidiary, Caplin Steriles, has received final approval from the USFDA for etomidate injection USP. Etomidate is a general anesthetic, used for the induction of general anesthesia and for the supplementation of sub potent anesthetic agents. According to IQVIA (IMS Health), etomidate injection USP had US sales data of approximately $9 million (~Rs 66.16 crore) for the 12-month period ending October 2020.

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One of the major problems caused by the Covid-19 pandemic is the disruption of global supply chains. Strict lockdowns that were imposed at the beginning of the year led to restrictions in important economic activities. The supply of essential commodities was affected at both the national and international levels.

Now, we see that countries are still facing difficulties in conducting their export activities. A major reason for this has been attributed to the shortage of shipping containers! Currently, there are not enough containers to meet the flow of global trade. Let us understand the specific details regarding the global container shortage, and how India is being affected.

The Disruption in Global Supply Chains

As the whole world entered into a lockdown in March-April, we saw that exports and imports of essential food items and manufacturing components took a big hit. The suppliers and logistics firms had no option but to stop or cut down their operations, due to restrictions imposed by their governments. The number of labourers who worked at ports had reduced drastically. This ultimately led to a huge reduction in the speed of cargo handling.

To reduce costs, shipping or logistics firms began to cut down on the number of cargo vessels. Such companies would otherwise make huge losses if they continue to send their ships without any cargo. This meant that exporters would have to pay very high freight charges for shipping their products to other countries.

What Led to a Shortage of Shipping Containers?

Since shipping lines were closed for a certain period, exporting companies were not able to collect empty containers that were held up in ports. In most countries, the containers are stored further away from the ports. These could not be returned to the ports at the required time. The reason for such a lag was because of a lack of manpower and a shortage of drivers- which was due to the lockdown restrictions. Thus, a large number of shipping containers were kept idle in countries around the world. Ultimately, the waiting time for the delivery of containers started increasing.

Manufacturers, trading companies, retail businesses, and logistics firms all around the world are now facing container shortages. The cost of shipping goods has increased rapidly. In the case of India, the current waiting time for shipping containers is two weeks or more. Normally, it would have only taken 1-2 days. This is a very alarming situation indeed.

The Chinese Connection

Most countries started to remove lockdown restrictions around July-August. Global economies started to slowly recover. However, one country managed to show a much better recovery than others – China. As per reports, we know that coronavirus started in China in late 2019, and they did not disclose the information to other countries. At the same time, the country prepared strategic plans at an early stage and was able to manage Covid-19 very quickly. The Chinese Government provided support to their factories to ramp up production just after Covid. Do bear in mind that all factories around the world were closed during this period. Thus, China was able to increase its exports at a rapid pace.

Some industry experts have even raised concerns about a ‘Container Mafia’ that is present in China and various other South-East Asian countries. They state that these groups are hoarding containers and driving up global shipping costs. We will have to wait for more clarifications on these claims.

How Has India Been Affected?

According to the latest data from the World Trade Organisation, India’s exports fell 8.7% YoY in November. The total imports contracted by 13.3% YoY in the same month. These export figures are quite shocking. We are aware that most Indian sectors have shown a great rebound in their production activities since August-September. So, the fact remains that Indian exporters are finding it difficult to ship their products- as a result of the global container shortage.

As we all know, India is now reducing its imports from China due to the ongoing geopolitical tensions. Thus, our country will now have to pay a huge price for importing essential commodities from other countries.

Let us find out how the freight charges have increased for India over the last few months. [Freight charges refers to the price that is charged by a carrier for sending out cargo from the source location to the destination location]: The freight charges for a 20-foot container for shipments from Mumbai to Dubai has increased 25 times (from $10 to $250) in five months. The prices have surged 282% and 117% for Australia and Qatar, respectively. On average, the freight cost has gone up by 190% for West Asia and 159% for Europe. No wonder companies like SpiceJet are planning to focus more on cargo!

Specific Sectors that Could be Affected

We saw that the shipments of packaged foods and electronic items had surged in recent months. This had boosted expectations of a busy and profitable Christmas season. However, the Indian companies that manufacture these goods are facing major hurdles due to the global container shortage. These firms are unsure whether their orders will be shipped on time. As mentioned earlier, Indian firms will have to wait more than 2 weeks for the delivery of containers.

The automobile industry in India is witnessing a revival. It is currently a very booming sector. The domestic sales of all types of vehicles are seeing high growth. However, the industry is now facing a major problem with its exports due to the ongoing container shortage. There are also reports which state that certain automobile manufacturers are finding it difficult to import essential manufacturing components.

India is one of the largest exporters of agricultural products. The farm product exporters are also facing major cost-related issues. There had been reports stating that Diwali orders, that were received by Indian agro firms from various countries, reached only after the festival due to container shortage.

The Way Ahead

As we can see, all countries are facing difficulties with respect to the global container shortage. It is the logistics companies and exporters that have been the most affected due to the ongoing pandemic. The surge in shipping costs is a cause of worry for Indian exporters, who were already struggling with the adverse effects of the pandemic. As the Christmas season is upon us, these exporters have already received a major demand for certain products. However, they are worried that such orders will not be able to reach the specified countries on time. The Indian exporters have also stated that customers are not ready to obtain goods if prices are increased.

Our country could be deeply affected if we do not find a solution to tackle this problem at the earliest. The revenue from exports, which are a major source of income for the country, could see a huge decline.

Recently, the Indian government has asked shipping lines to ensure the capacity of 1,00,000 available containers per week. However, it is sure that this could take time to be enforced. Certain experts have stated that the global trade situation is expected to be back to normal only by February-March 2021. Let us hope that the container shortage problem is given more importance, and countries work hand-in-hand to solve this issue.