India aims to expand its shipping fleet and boost container manufacturing capabilities
3 weeks ago
India aims to expand its shipping fleet and boost container manufacturing capabilities
The Indian government is actively working to mitigate losses by enhancing the country's container production capacity and strengthening its domestic shipping fleet, particularly in light of the significant increase in global shipping rates, which doubled in September due to the ongoing conflict in the Middle East.
Sources indicate that there is a strong recognition at higher levels of government regarding the need to expand the shipping fleet and improve container manufacturing. Interministerial discussions are currently taking place among the finance, shipping, and trade sectors. With current exports standing at $450 billion similar to China's figure in 2004 there is a clear opportunity for India to build its fleet and container capacity during this pivotal moment of growth.
Officials have expressed concerns that Indian exports, especially those involving low-margin, high-volume goods like textiles, could be adversely affected by the escalating conflict, particularly with Iran's involvement.
The World Bank's recent trade monitoring report highlighted that shipping costs remain "more than twice as high" compared to a year ago, contributing to ongoing global supply chain stresses linked to disruptions in West Asia, the Mediterranean, and Asia. Amid rising freight charges, Indian exporters have noted a trend of international shipping lines increasingly denying slot allocations, as reported by The Indian Express.
Following the escalation of the conflict in October 2023, the World Bank’s Global Supply Chain Stress Index revealed a 72% increase in delayed shipping capacity, reaching 1.4 million twenty-foot equivalent units (TEUs) in September 2024.
In light of the Red Sea crisis, Indian exporters have been urging the government to establish a globally recognized Indian shipping line to alleviate pressures from international shipping companies, which have been imposing significant costs on Indian MSMEs.
Notably, the situation in the Red Sea has led to a surge in revenues for international shipping firms. For instance, the Danish shipping giant Maersk recently raised its profit forecasts for the third time since May, citing strong demand for container shipping and elevated freight prices stemming from the ongoing crisis.
Source: DailyFT