• 23. April 2020
  • 09:20
  • Economy

India: delays in ship handling

Peter Deubet, Head of the Hamburg Representative Office Mumbai, and his colleague Lea Miram, Hamburg Business Manager in Mumbai, report on the current situation in the growth market India.
 
As already expected, the previous nationwide lockdown in India has been extended until 3rd May 2020. All international and domestic flights are still on hold and many airlines need financial support from the Indian government in order to continue their operations after the pandemic.
 
Logistics costs for the transport of goods are expected to rise. Some transport providers (especially trucking companies) have already increased their prices by more than 80 percent. The reason given for the surcharges for the transport of goods is a huge drop in offered capacity due to regulatory challenges and a drastic labour shortage.
 
The movement of ships in Indian ports is also being greatly restricted due to the closure and quarantine measures taken by the government to combat the coronavirus pandemic. There are ships waiting for days in Mumbai, Gujarat and the west coast because the ports are facing labour shortages and serious logistical problems. When the ships get the slot on the berth, loading and unloading becomes an immense challenge, as there is less than 20 percent of the workforce in the ports and there are hardly any trucks to transport the goods to the hinterland.
The shipping lines are therefore already cancelling their calls. The containers are stuck in important ports partly due to global trade restrictions and the increase in "blank sailings" by shipping lines often leads to a shortage of empty containers.
 
The Indian government wants to gradually start opening the lockdown restrictions from 20th April. In order to ensure efficient, preferably contactless customs clearance and to reduce transaction costs, it has already been decided to allow fully electronic clearance by transmitting a PDF-based eOoC copy (electronic Out of Charge) for BoE and eGate Pass. Certificates of origin can now also be generated online.
 
The Indian Ministry of Shipping could use the Covid19 pandemic as a reason for declaring force majeure. Adani Ports and Special Economic Zone (APSEZ), India's largest private port company, has already announced force majeure at its facilities in Mundra, Tuna and Dhamra. At the same time, the Ministry of Shipping has also instructed all major ports to suspend penalties for delays caused by the lockdown.
 
These developments and conditions are also problematic in the context of India's high import dependence on China (almost 70 percent in value terms). This affects the Indian health industry in particular, but also global supply chains in general. India has reduced the export standards for paracetamol, hydroxychloroquine (HCQ), an malaria drug now used to treat Covid-19 patients, and 20 other drugs and mass medicines in the context of the Covid-19 pandemic in order to ensure the supply of essential medicines.
 
The world's largest lockdown so far has cost the Indian economy an estimated 7-8 billion rupees ($ 98 billion) over the 21-day period.
 

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