India: Ship handling delays

05.29.2020 08:35 Economy

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 lockdown in India has been extended until 31st May 2020 – since several relaxations have been introduced, it can be considered as “semi-lockdown”. Currently, India is divided into different zones – green, orange and red. 

While relaxations have been introduced in green and orange zones, no activities and services other than essentials are allowed in the red zone. In this phase of the lockdown, more power is given to the states. In areas where the number of infections continues to rise, the federal states have to enforce strict rules.

In the context of relaxations, the number of confirmed new corona infections rose further to 138,000 (as of May 25). Due to a comparatively low test rate, many experts assume that the numbers of unreported cases are high.

All international flights are still on hold, whereas domestic flight operations have been resumed under regulations. Several trains are operating as well as busses and taxis. 

Intrastate-movement of essential and non-essential goods is possible and people can now avail a license to cross borders.

Logistics costs for the transport of goods are expected to rise. Many truck drivers returned and vehicles are plying in large numbers on the highways. But a lack of service centres and repair shops to replace tires or do petty repairs is creating further delays in the supply chain. 

The movement of ships in Indian ports also remains restricted due to the closure and quarantine measures taken by the government to combat the coronavirus pandemic. Loading and unloading of ships becomes an immense challenge which causes delays, since the workforce in the ports and trucks to transport the goods to the hinterland are missing.
Several shipping lines are therefore already cancelling their calls. 

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) Certificates of origin can now also be generated online.  

Cargo volumes handled at India’s twelve state-owned major ports fell 21.1 percent in April to 47.4 million tonnes from 60.1 million tonnes a year ago as the coronavirus-induced demand compression roiled global trade. 
The container handling volume in the JNTP in Mumbai has shrunk by 37 percent compared to the previous year. According to CRISIL Research, the container volume at Indian ports are expected to decline by 16 percent in the fiscal year 2021 as the global health crisis sent consumer demand plummeting with a cascading impact on supply chain.

Official data published by the Indian government shows that India's exports fell 60.3 percent year-on-year in April to USD 10.4 billion. Imports also fell 58.7 percent in April to 17.1 billion USD from 41.4 billion USD in April 2019.
These developments and conditions are also problematic in the context of India's high import dependence on China (almost 70 percent in terms of value), affecting India’s health industry in particular. 
The Indian Prime Minister has recently announced 245 billion USD for the Aatmanirbhar Bharat Abhiyan (self-reliant India) stimulus package. It includes credit lines to MSME businesses and benefits for taxpayers and the salaried personell, and regulatory relief for the real estate and construction sectors. 

The lockdown so far has cost the Indian economy an estimated 234.4 billion USD till 3rd May 2020.

Peter Deubet, Port of Hamburg Marketing representative in Mumbai

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