China’s Ningbo Port being shut for 2 weeks is having a mixed impact on India trade, as the port blockage is hurting local electronics market at one end, while container shortage issue in the domestic market is getting addressed albeit for a short period.
“Some empty container vessels from China had to be diverted to India upon port closure and this has improved (empty) containers supply for the domestic market. Though this supply ease would last only for another three weeks, we (industry) are expecting at least 10 percent of the shortage to be addressed in this span,” Arun Garodia, vice chairman of EEPC India, told Business Standard.
India has been facing acute shortage of containers since November 2020 leading to ocean freight rates having zoomed 5-7 times within a span of 8-9 months.
“Though the availability of empty containers is improving for India, there is no respite from high ocean freight for the industry,” Garodia added.
China’s Ningbo Port was forced to close its Meishan container terminal two-weeks ago after a worker tested positive for COVID-19. The port terminal was reopened on August 25.
Alongside, the blockage has already begun to take a toll on the local electronics market, said industry officials.
Currently, all key components like chipset, compressors for ACs and refrigerators and television panels (LED & LCD) are being imported from China – at least 70 per cent of the local demand.
According to industry executives, hardly any containers are now coming from China as a result there is severe shortage of these components in India.
This has led to many leading brands cutting down on their festive season plans. Usually, they stock up for higher demand during the festive weeks, by ramping up production during July, August and September.
“The shortage of components like chipset and panels is hurting. The issue is unlikely to be resolved anytime soon and this is likely to lead to shortage of TVs during the festive season. Moreover, as the Indian Premier League and the ICC T20 World Cup are scheduled in the festive months, we will most definitely witness shortage of TV sets in the market this year”, said Avneet Singh Marwah, chief executive officer, Superplastronics – manufacturer and brand licensee of Kodak & Thomson smart TVs.
WHAT’S AT STAKE…
• To improve empty container availability by 10%
• No respite from high ocean freights ease of empty container supply
• Shortage of electronic components to impact festive sales
• Price of electronic items to go up 7%-11% before peak festive season
Apart from shortage, prices of several items are set to rise just ahead of the festive weeks. According to B. Thiagarajan, managing director at Blue Star, air conditioner makers are now left with no other option but to affect another round of price hikes between 7-11 per cent – before peak festive season.
Prices of appliances like ACs, Refs and electronics items like TV, notebooks and smartphones have gone up twice already since mid-2020.
Amid the ongoing trade issues, Jawaharlal Nehru Port Trust (JNPT), the country’s largest container port terminal, remains unperturbed, despite a likely congestion in coming weeks now that the China port terminal has reopened and imports from China to India would flow in.
“We are observing the traffic daily and do not see any panic conditions even if imports from China flood our terminals. There is enough capacity and our terminals are waiting for cargo. We will not face any congestion since our yard occupancy is only 25-30 per cent normally and hence there is ample scope to keep cargo even if vessels from China flood our terminals,” said Niteen Borwankar, chief manager (traffic) at JNPT.
Of the port’s total cargo handled annually, about 12.5 per cent cargo comes from China.