Containerised trade to see more disruption

After a brief respite, containerised trade may once again see some disruption with the end of lockdown in Shanghai. Availability of shipping liners too will continue to be a problem.

The end of the twomonth lockdown in Shanghai on June 1 and the subsequent sharp rise in trade activities may lead to another short-term disruption in the global supply chain, said India Ratings. It believes that post resumption, trade activities in China can see a sharp rise to clear the three-month backlog, which may lead to container rates remaining elevated and disruptive realignment of container routes.

The Federation of Indian Exporters Association (Fieo) too expects some disruption in container availability. However, it doesn't expect any further rise in shipping costs and container rates.

"Shanghai would have pending cargo to be transported and hence container availability could become an issue. However, shipping costs and container rates are already much elevated. Though we do not expect any softening in near future, we hope that there won't be any further rise," said K. Unnikrishnan, deputy director general, Fieo.

Container availability problems had eased in the past few months after remaining acute since the pandemic outbreak.

Further, availability of shipping liners is yet another issue. "Two-three years before when the shipping industry was witnessing significant losses, major consolidation had happened. This has left the industry with a few major players. Capacity addition by these few players may take time and the problem related to availability of liners will continue till then," said Unnikrishnan.

For Indian traders, the operations of the Colombo port too have hit their shipping, though there has been some diversion to Indian ports. The port is not fully operational due to fuel and foreign exchange scarcity. A large portion of Indian cargo goes through the Colombo port.