Sugar exports has been affected by a severe shortage of containers and has led to rising shipping costs and difficulty in moving goods. The Ministry of Food and Public Distribution mentioned that several representations have been received from sugar associations highlighting that a sufficient number of containers are not available for export.
Rahil Shaikh, Managing Director of MEIR Commodities India, said the container shortage is affecting exports. “Sri Lanka consumes around 600,000 tonnes of sugar from India every month. But freight costs increased from $250 per container to $1,000 between January 2020 and January 2021,” he said. “Afghanistan consumes 60,000 tonnes of sugar from India each month, and freight charges for Afghanistan are from $125 per container to $550 per container. There has been a big increase in freight rates and shipments are pretty tight at the moment.”
The All-India Sugar Traders Association pointed out that exports in January 2021 were only around two lakh per tonne, and only four lakh per tonne are expected in February. “If steps are not taken to ship sugar in bulk ships instead of containers, India will be well behind the export target of 60 lakh tonnes,” it said.
The Freightos Baltic Global Container Index (FBX), which tracks the cost of container shipping, has almost quadrupled from the China-Europe route since early November to stand at $7,827 on Friday. The FBX reading for containers from China bound for the west coast of the United States has nearly tripled since late May to $4,286 on Friday. Officials acknowledged the fact that the biggest problem exporters are facing right now is inadequate supply of containers, as over a thousand containers are still stuck in the United States and Europe due to COVID-19 restrictions.
Jonathan Roach, Braemar analyst, told AFP that container shipping costs are soaring from Asia, not just to the UK but to most destinations for shipments out of China and Asia. He explained that with increased durable demand, container demand has increased exponentially. Moreover, bottlenecks have been created across the sector due to strict COVID-19 hygiene and sanitation measures in ports, logistics centres and storage depots worldwide. “When there is a delay in shipping empties back to loading hubs and the same time as cargo surge, availability of empty container equipment will tighten,” Roach said. “We expect this imbalance, between supply and demand, to continue while strict COVID-19 restrictions remain in place.”