Textile deliveries have been hit by a shortage of containers and increased freight costs. The situation is affecting domestic and export orders.
Denim exporters are staring at piled up shipments with manufacturers forced to stock around 500 containers of the fabric ready for export in warehouses due to the shortage.
Similar is the situation for yarn manufacturers.
Industry experts say that new orders are not coming in as manufacturers have been unable to deliver past ones.
Vinod Mittal, a denim manufacturer in Ahmedabad said, “The denim industry witnessed a revival in the last quarter of FY24 but times have been challenging after that. There is a steady offshore demand but we are unable to export due to container issues. As a result, demand for godowns to store the stock has gone up and so have their rents as different sectors are facing a similar situation. Until we deliver earlier orders, we do not get new ones.”
According to industry estimates, only the denim sector has seen a stock pile-up of around 500 containers (20 tonnes each) in Gujarat. This has reduced capacity utilization of units to 60-70% from around 90% around three months ago.
“Exporters are not able to ship their manufactured goods due to unavailability of containers . Consequently, godowns available for hire are high in demand. This attracts an additional cost at a time when payment cycles are stretched. As a result, manufacturers are facing working capital shortage,” said Kumar Agarwal, a denim manufacturer in Ahmedabad.
Jayesh Patel, senior vice president, Spinners’ Association Gujarat (SAG) said, “Exports have become costlier due to the Red Sea crisis. Also, shipping companies get better pricing from China, so they prefer taking containers from China. This has reduced the availability of containers here and affected our competitiveness in the global market. We are observing higher stockpiling with full godowns. Also, payment rotation has been affected.”
