As exports rise, container prices increase at major Indian ports

Ships undergoing repair on April 27, 2021, at the port of Fraserburgh, one of the United Kingdom's main ports for Whitefish. Many of Scotland’s fishing areas, like Fraserburgh, voted for Brexit, thinking it would free them from European Union rules. Instead, they lost markets, and many are facing ruin. (Andrew Testa/The New York Times)

As the world economy recovers from COVID-19 disruptions and demand for exports rises, container prices at major ports, such as Chennai, Mundra and Nhava Sheva, remain high.

The average price of a 20-ft dry container at the Chennai port stood around $1,600 (Rs 116,736, at Rs 72.96 to the dollar) at the end of May, compared to around $1,083

(Rs 79,015) in May 2020, multiple shipping companies told Moneycontrol.

The average price of a 20-ft dry container in Mundra at the end of May stood at around $1,550 compared to $1,163 recorded in June 2020, while for Nhava Sheva in Navi Mumbai, it was at $1,700 in May against $1,075 in June 2020, market sources told Moneycontrol.

India’s exports grew by 67.39 percent to $32.21 billion in May from $19.24 billion in the same month last year, driven by healthy growth in sectors such as engineering, pharmaceuticals, petroleum products, and chemicals, according to government data released on June 2. Exports were at $29.85 billion in May 2019.

“Trading volumes have risen in the past two months, and they are expected to remain high for the next few months as a number of companies look to supply the pent-up demand in other countries,” a Mumbai-based shipping analyst said.

Demand for exports, especially vaccines, medical equipment like masks, personal protective equipment kits, and oxygen concentrators, has risen in the past few months, shipping companies said.

“Many companies are likely to get into bidding wars to extradite their export and import cargo, and this is likely to lead to higher tariffs,” another Mumbai-based shipping analyst said.

Demand for white goods has also picked up in the last few months, companies said.

“As the world economy opens up, especially the US and European markets, people aren’t able to spend on holidays because of the pandemic, and they have built up quite nice disposable incomes, and that has gone into consumer goods,” the second analyst added.

Furthermore, as the world economy reopens in the aftermath of COVID-19, a growing shortage of raw materials is also wreaking havoc on global supply chains, thereby creating pent-up demand, market experts said.

The shortage of computer chips, used in electrical appliances and vehicles, seen in January-March, has now created a pent-up demand in the export market.

This can be seen as Pune-based two-wheeler maker Bajaj Auto Ltd in May reported a 113 percent growth in exports, while white goods makers like Whirlpool have reported around 25-30 percent growth in exports in May.