Rising freight charges more than the last year due to the shortage of shipping containers are possessing a detrimental effect on little and medium-sized exporters, mentioned a new report. As of June 10, 2021, Drewry’s composite World Container Index (WCI) — a worldwide index for container spot marketplace freight prices on all the significant routes, peaked at $6727, up by more than 300 per cent because the emergence of the coronavirus in December 2019, trade finance organization Drip Capital mentioned in its report Global Shipping Crisis. As per its internal evaluation, SMBs globally have more than 25 per cent share of the $18 trillion maritime trade. While the Suez Canal blockage in March 2021 uncerscored distinctive challenges faced by the shipping and logistics business, SMBs especially have been going by way of a more profound and widespread crisis because the onset of the COVID-19 pandemic and the resulting financial contraction, the organization mentioned.
“In March 2020, with social distancing protocols and coronavirus clusters amongst dockworkers (meant slower shipment processing times), there emerged a shortage of containers in Asia as empty metal boxes were stranded at North American and European ports,” the report noted. The predicament of container shortage got really out of hand in November 2020, such that the container availability index (CAx) for “Forty Foot Equivalent Units reached 0.9 as containers were piling up at the port of Los Angeles (LA).” CAx is a measure ranging in between and 1 that reveals the quantity of containers that leave and enter a port in the similar week. Low CAx values indicate a deficit of containers when higher values indicate a surplus of containers.
Subscribe to TheSpuzz SME newsletter now: Your weekly dose of news, views, and updates from the world of micro, little, and medium enterprises
“We are planning our shipments well in advance than we used to a year ago. Still, container availability has been an issue. When the goods are sitting ready for two to three weeks, we don’t get an empty container to have the goods shipped to us from India. This has been affecting our sales and delaying our collections,” the report cited Vivek Pandit, CEO, Indian Foods and Spices — an SMB wholesale importer from the US of Indian meals products.
Enterprises that have been desperate to export their goods abroad meant paid premium prices to obtain containers which had improved the shipping charges with Drewry’s composite WCI increasing from $2628 at the start out of November 2020 to $5340 in January 2021. “It became harder for US exporters to get containers because of China’s aggressive tactics to bring back empty containers. This competitive environment affected many but especially all the SMB exporters who were burdened by these high costs,” the report mentioned.