No sooner did the Union shipping ministry lay down the protocol for vessels, calling on Indian ports to combat COVID-19, importers, especially in the cement industry, are already staring at a cost escalation on account of the quarantine.
“India imports limestone (used to make cement) in large quantities from the United Arab Emirates (UAE), Qatar and Oman, where the voyage is about three to four days. Now, the vessels will have to wait for 10 days more before berthing here. Due to this, ship owners will be budgeting the extra wait time on account of the quarantine. This will push up the cost of transportation for importers, in turn, impacting the cement industry,” Rahul Bhargava, director (commercial & operations) at Essar Shipping told.
India imports sizable dry bulk, liquid bulk and container cargo from West Asian and Southeast Asian countries from where shipping takes less than 14 days.
“It will be a serious issue for limestone importers, mainly on the west coast, where the commodity comes typically to the ports in Gujarat. Their cost of transportation is expected to go up 35-40 per cent as both bunkering and chartering costs will rise for the additional number of days,” said Bhargava.
While the short haul will take a hit, for long haul, where limestone vessels move from these countries to the east coast of India, the voyage is about 10-11 days. So, the cost escalation will not be that high.
“The additional number of days (to make up the quarantined period) is less. This means cost of transportation for the east coast importers will not be impacted much,” Bhargava added.
From the West Asian countries such as Saudi Arabia, Iraq, UAE, Oman and Qatar, India largely imports its crude oil and limestone.
Crude oil imports will not have much impact since both Saudi Arabia and Iraq, the top suppliers to India, are not among the 22 listed COVID-19 infected countries.
Vessels arriving from any Chinese port, affected by the virus, will also have the necessary quarantine period of 14 days, said the ministry.
India either gets Chinese container cargo directly or it is transshipped via Colombo or Singapore. India imports electronic goods, spares and electronic intermediates such as chips and other components in large quantities from China.
Whether it is a direct voyage or via transshipment, it takes about 15-20 days for a container shipment to come to India from China (to Chennai Port or the Jawaharlal Nehru Port Trust).
“China’s cargo will have to be kept in quarantine in the port and terminal boundary which will then attract a per day demurrage charge (for 14 days), that the port levies on the cargo. This will push up cost of transportation for the importer, but here, the port has the freedom to give discounts or wavers depending on the trade conditions in the current scenario,” said Subrata K. Behera, manager, ports and container research at Drewry, a London-based maritime research firm.
Also, India’s exports are likely to get impacted in the coming days as industrial plants are operating at minimal levels due to weak demand and downsizing of staff at various locations. These will also impact outbound trade, said industry officials.