The Global Trade Research Initiative (GTRI) has raised alarms about the impact of a strike at 14 major US ports, which began on October 1, 2024. This strike is significantly affecting Indian exports, particularly in the textiles sector, due to delays in unloading cargo. If the strike persists, goods may be rerouted to US West Coast or Canadian ports, which could increase costs and transit times by 2.5 to 3 times. The number of container ships waiting to unload has surged from three to 45, with a backlog expected to double, potentially costing the US economy between $4.5 billion and $7.5 billion weekly. Negotiations between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA) are ongoing, but no agreement has been reached yet. [d5c91aeb]
In addition to the strike, rising freight costs and container shortages continue to threaten India's export industry. Ajay Srivastava from GTRI emphasized the urgency of addressing these issues, calling for immediate action to boost domestic container production and support local shipping firms. In 2024, shipping rates for 40-foot containers have stabilized at $4,775, a significant increase from $1,420 in 2019. India's limited container production capabilities, estimated at 10,000 to 30,000 containers annually, pale in comparison to China's output of 2.5 to 3 million containers. Over 90% of India's cargo is transported by foreign shipping companies, complicating the situation as delays at foreign ports, including those affected by the strike, contribute to rising costs. [ca67ec04]
To mitigate these challenges, GTRI has recommended scaling up container production facilities in key locations like Bhavnagar and Chennai. The organization stresses that urgent action is needed to safeguard against rising costs and potential supply chain disruptions that could further hinder India's export capabilities. Enhancing domestic production is seen as vital to reducing reliance on foreign shipping and mitigating the impact of fluctuating freight rates on exporters. [ca67ec04]