Lanka crisis to boost India’s trade logistics

Lanka crisis to boost India’s trade logistics

The Sri Lankan crisis could prove to be a windfall for India’s global trade logistics. India’s ports have already started to benefit from the disruptions caused at Colombo, with Mundra emerging as the costliest port globally for standard containers for the first time this year. In April, it was the third most expensive port. Increase in container demand and higher traffic are the major factors contributing to the average container price at Mundra shooting up in May to $2,489 (per unit price for a 20ft dry container, or DC), experts told TOI. Dry storage containers (20 or 40 feet in length) are the most common containers used in shipping dry goods, excluding items like food or chemicals that require refrigeration. Given the shift in maritime dynamics, India has an opportunity to get itself some permanent shipping diverts towards its shores, and move up the global value chain, experts added. “Due to the Colombo crisis, more and more transshipment containers have been directed to the east coast ports in India,” said Christian Roeloffs, founder and CEO of Container xChange, a logistics tech company that offers a container trading and leasing platform. Ports in south India have gradually started expanding their capacity to handle increased cargo traffic owing to the continuing crisis in Sri Lanka, he added. Another key indication is the rise in Container Availability Index (CAx) values at Nhava Sheva from 0.73 in week 21 (last week of May) to 0.76 in week 22. In the following weeks, the CAx is expected to flit between these two numbers. CAx values of over 0.5 mean that more shipping containers are entering the Indian ports, and there is less demand for export boxes. May also marked a peak in global container prices picking up around the world for the first time this year to $2,330 (up from $2,207) for 20DC, and $4,410 ($3,800) for 40HC (high cube) containers. Last year, trade — both exports and imports — was severely impacted, with sea freight costs from China sky-rocketing as high as 200% and a huge shortage of containers.Amid the tensions in Sri Lanka, the Indian subcontinent’s dependence on the port of Colombo is also being highlighted. Around 3 million TEU (twenty-foot equivalent unit) export-import (exim) cargo is routed from India via Colombo port every year. Thus, it handles around 50% of Indian transshipment cargo. CareEdge Ratings associate director Arunava Paul said, “Initial estimates suggest that 50,000-70,000 TEU of exim cargo are expected to be diverted to Indian ports during the April-June quarter of 2022. However, this is minuscule and constitutes only 2% of the total transshipment cargo routed from India. Intermittent operational disruptions in Colombo port have increased the turnaround time for vessels. However, the vessels which cannot wait are only being diverted to Indian ports. The total volume diverted is not very meaningful as compared to overall transshipment cargo volume. Overall volume at Colombo port is not impacted much. But if the disruptions continue for long, it may benefit southern ports and also the Mundra port, which has deeper draft and mechanised cargo handling for faster turnaround of vessels.” In the longer run, there is an opportunity to develop a transshipment port to partly replicate Colombo. Deeper draft to handle bigger vessels, geographical location and competitive pricing are the main advantages of Colombo port as compared to its Indian counterparts. The international seaport and container transshipment terminal at Vizhinjam (Kerala), once developed, may provide the best alternative, Paul added. SOURCE :- TOI

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