Indian exporters are facing a sharp escalation in freight costs, with shipping charges to the US, Europe and other Western markets rising three to four times over the past two months amid widespread disruption to vessel schedules.
Freight rates that were around $3,000 per container a couple of months ago have now crossed $9,000 on average, putting significant pressure on exporters at the start of the peak shipping season.
The escalation comes at a critical time, as exporters are beginning to move cargo for the festive season in the US and Europe, including Diwali, Halloween, Thanksgiving, Christmas and New Year. Agricultural exporters are also entering an important shipping window.
Industry sources said the primary problem is not an actual shortage of vessels or containers, but the lack of timely vessel availability caused by severely disrupted schedules.
Vessel schedules disrupted
Multiple blank sailings, port congestion and longer voyage routes have affected the reliability of shipping services. Industry experts said vessels are taking longer to complete their voyages, getting delayed at congested ports and consequently returning later than scheduled.
Sunil Vaswani, Executive Director, Container Shipping Lines Association, told CNBC-TV18 that the current situation is not due to a shortage of vessels or containers.
“There is no shortage of vessels or containers. This is a matter of vessel schedules which is disrupted because of multiple reasons including Red Sea crisis, Strait of Hormuz Crisis and key and well-equipped ports like Jebel Ali not functioning at their full capacity.”
According to Vaswani, the disruption has affected the integrity of vessel schedules and bookings, with congestion at major transshipment hubs such as Colombo, Singapore and Malaysia adding to the delays.
US services suspended
The situation has been further aggravated by the suspension of two of the five weekly shipping services to the US, including services covering the US East Coast.
The reduction in regular services is limiting exporters’ options and making it harder to secure space within the required shipping window.
The continued use of the Cape of Good Hope route, instead of the Suez Canal, is another major factor. The longer route, adopted by shipping lines amid the Red Sea crisis and Houthi attacks, can add 10-15 days to voyage times, delaying the return of vessels and further disturbing schedules.
Peak season adds to pressure
Freight rates generally rise during July-August as exporters begin moving goods for the Western festive season. However, exporters say the current increase is far beyond the usual seasonal rise.
In addition to higher ocean freight, exporters are also facing war-risk surcharges, additional inland transportation costs and expenses associated with routing containers to alternative ports.
Despite the steep costs, many exporters are absorbing the increase because missing the peak season could result in lost orders and market opportunities.
Industry sources also said Chinese exporters are frontloading shipments to the US ahead of the festive season, adding further pressure to already disrupted vessel schedules.
Exporters caught between cost and capacity
Indian exporters typically begin dispatching festive-season consignments from late July and August to ensure that goods reach overseas markets before demand peaks. The current disruption, however, is forcing them to choose between paying substantially higher freight rates or risking delays in delivery.
For exporters of agricultural products, the timing is particularly important as seasonal commodities must reach international markets within specific windows.
The present situation therefore represents a double challenge for Indian exporters: soaring freight costs and uncertainty over when shipping capacity will actually be available.
With peak-season demand strengthening in the US and Europe, exporters are increasingly concerned that the problem is no longer simply about securing container space. The bigger challenge is securing a vessel at the right time and on a reliable schedule.
