Amid Omicron concerns, trade bodies, shippers fret over supply chain disruptions

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Indian shippers and trade bodies are fretful over possible supply chain disruptions stemming from the spread of the Omicron variant of COVID-19, especially in European countries the government has identified as “high-risk.”

Representatives of the Indian National Shipowners' Association and trade bodies including the Engineering Export Promotion Council and the Federation of Indian Export Organizations met government officials this week to express their concern and discuss steps the Centre may take.

“Most trade bodies are worried that the global shipping supply chains may once again be disrupted in order to contain the spread of Omicron and this would hit both Indian imports and exports in the coming months,” a senior government official said.

India has not yet imposed any restrictions on the shipment of goods to contain the spread of Omicron, but many European countries, the US and Canada have announced strict restrictions on the movement of passengers to contain the spread of the virus.

They are also said to be considering trade restrictions if the situation is not contained.

Manufacturing concerns 

China is expected to double down on its Zero-COVID policy, which in the past has included mass lockdowns of entire cities, quarantines, as well as strict checks at ports including monitoring of ships and cargo to prevent carriers of the virus from coming into the country.

“If strict lockdowns and restrictions are imposed once again, not only will shipping be constrained, but we are certain to see yet more shortages of key manufacturing components and extended order backlogs for core electronic, automotive and consumer products depending on regions impacted,” an official from the Indian National Shipowners' Association said.

The shipping industry in India has been struggling with supply chain issues for the past two years since the outbreak of COVID-19, and continues to deal with a shortage of containers.

Container shortages 

During the outbreak of the Delta variant of COVID-19 in India in May, the Indian shipping industry faced an acute shortage of standard 20-feet equivalent unit shipping containers, used to ship almost all merchandise goods, and average charges for renting containers rose by 3-5 times in a few months.

Government officials said that until now no decision has been made on imposing restrictions on the movement of goods and they expect that a third wave of COVID, if one takes place, will be limited by the high rate of vaccination in the country.

Officials also added that they were in constant discussions with industry before deciding on any sort of restrictions.

“We are working with both the foreign shipping associations (Container Shipping Lines Association) and Indian shipping companies to create guidelines for quick quarantining of incoming ships so that containers can be quickly used,” another senior government official said.

Both last year and earlier this year, a series of lockdowns in major eastern Chinese cities led to container shortages across the world. China is the world's largest buyer of merchandise goods as well as the largest exporter by volume.