Why is there a scarcity of containers, and what is its effect on international trade?

The reduction in the number of shipping vessels due to the Covid-19 pandemic has resulted in fewer empty containers being recovered, resulting in many containers being stuck in inland warehouses or ports for a long time.

The government is in talks with exporters to help them address a global container shortage that has driven freight rates up more than 300% over the past year in key shipping lanes. So, why is there a scarcity of containers and what the government can do to solve this problem.
Why is there a global container shortage?

Experts note that the reduction in the number of shipping vessels due to the Covid-19 pandemic has resulted in fewer empty containers being recovered, leaving many containers stranded in domestic warehouses or ports for a long time. . Congestion at key ports, such as long queues at ports in the US, has also contributed to extended turnaround times for containers, while a sustained global economic recovery has provide an impetus to trade. As a result, the scarcity of containers coupled with the faster-than-expected recovery of global trade has pushed up freight rates significantly over the past year, especially for some key international routes. even increased more than 500% compared to September last year.
How does container shortage affect Indian exporters?

Indian exporters are facing severe delays in their shipments and consequent liquidity problems as they have to wait longer to receive payment for the shipment. export goods. Exporters said shipments that used to take 45 days are now taking 75-90 days to ship, resulting in 2-3 months of late payment, which has led to liquidity shortages, especially for small exporter.
In addition, business structure issues such as the high turnaround times of shipping vessels in India also add to the lack of containers that exporters are currently facing.
How can the government help with this problem?

Exporters are calling on the government to regulate the export of empty containers. Experts note that some countries are willing to pay extra fees for empty containers and this further exacerbates the container shortage. Exporters have asked the government to limit the export of empty containers at all Indian ports, adopting the practice of Kolkata port, which is to limit the number of empty containers allowed to be exported to 100 containers per vessel. , for a period of 3 months. Exporters are also calling on the government to release some 20,000 containers that have been neglected or detained by government agencies so they can increase their supply.
The Federation of Export Organizations of India has also called on the government to have a freight subsidy scheme for all exports from here until the end of the fiscal year (June 2022), when prices The freight is expected to return to normal.
Exporters are also asking the government to push back against shipping lines' move to offer priority hold first at a higher price, asking carriers to return to providing storage on an AI-based basis. First come first served.
In the medium term, exporters have called on the government to take steps to boost container production in India.
Source: The Indian Express
Keywords: scarcity of containers, international trade

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