High ocean freight and persistent supply chain challenges in the period leading up to the festive season, when demand across industries typically surges, have resulted in shipment delays and constricted profit margins for domestic manufacturers.
The heightened seasonal demand for goods in the international market has exerted additional strain on the already overburdened shipping lines and intensified apprehensions of a further freight crisis.
Congestion in the vessels and elevated freight rates have impacted orders and shipments from exporters based in Indore, a prominent trade centre and hub for the micro, small, and medium enterprises (MSME) sector.
“Freight rates are escalating for nearly all destinations, particularly for the United States and Latin America. There have been numerous challenges in exports, ranging from bookings to inventory management, as vessels are severely congested,” states Dinesh Mishra, a senior executive at a packaging industry in SEZ Pithampur.
Exporters said that they now have to plan shipments at least 15 days in advance, as opposed to a week earlier, due to congestion in the shipping lines.
Pharmaceutical products, engineering goods, grains, confectionery, oil meals, and aluminium products are among the primary export items from Indore.
Exports from Madhya Pradesh in the first quarter of 2024 experienced a 5% year-on-year surge, reaching Rs 16,155 crore, with Indore contributing the highest exports during the period, primarily driven by pharmaceutical and engineering goods, according to official data.
The primary export destinations were the USA, Bangladesh, UAE, France, and the Netherlands.
A pharmaceutical manufacturer and exporter from Indore Amit Chawla remarks, “Freight for Africa has escalated by more than 15%, and this is impacting exports because the market requires time to absorb the increased prices”.
Exporters emphasized that the surge in freight rates has constricted their profit margins and intensified competition in the international market.