Business Across Borders 2022

16 Average Price of Containers at Indian Ports (in USD) 2021 Source: Drewry & xChange data According to the Federation of Freight Forwarders’ Associations in India (FFFAI), one of the major reasons for the shortage of containers is the congestion at the US and Chinese ports. This has led freight rates to increase sharply in FY21. From Chennai to the US, the pricing reached $12,000-13000 from earlier around $3,000. Similarly, for European ports, it is now $3500-4,000 from $750-800 earlier. The rise in logistics costs has adversely impacted the working capital. It has a major impact on micro, small and medium exporters as well with freight rates surging over 350-400% in FY 2020-21 for key locations like the US, Europe, Latin America, and Africa. Container Availability Index at Major Indian Ports Note: “1” indicates 20 ft. dry container & “2” is 40 ft. dry containers Source: Drewry & xChange data The rise in Container Price Index & Container Availability Index is expected to continue in the near term, leading to supply chain slowdown. The average price of a 20 ft. dry container in India in September 2021 is US$ 2,462 from US$ 2,078 in May 2021 (increased by 18%). Similarly, inbound containers are also recorded almost 4 times increase in costs at the major Indian ports (including Nhava Sheva, Mundra and Chennai). Need for digital transformation in supply chain With a US$ 215 billion logistics business and a CAGR of 10.5%, India’s supply chain and logistics sector are one of the largest in the world. India’s high logistics cost of 14% of GDP compared to 8-10% in the US and Europe has resulted in a US$ 180 billion competitiveness deficit for the country. Dun & Bradstreet