Sri Lankan crisis to boost global trade logistics of India

The Sri Lankan crisis could prove to be a windfall for the global trade logistics of India. India’s ports have already begun to benefit from the crisis caused at Colombo, with Mundra emerging as the costliest port globally for standard containers for the first time this year.

Mundra was the third most expensive port in April.

Growth in container demand and higher traffic are the primary factors contributing to the average container price at Mundra increasing in May to $2,489, experts told the media. Dry storage containers are the most common containers utilised in shipping dry goods, except items like food or chemicals that need refrigeration.

Experts said India can obtain some permanent shipping diverts towards its shores, and move up the global value chain.

Due to the Colombo problem, more and more transshipment containers have been directed to India's east coast ports, said Christian Roeloffs, founder and CEO of Container xChange, a logistics tech firm that presents a container trading and leasing platform. Ports in south India have gradually begun expanding their capacity to manage improved cargo traffic owing to the ongoing crisis in Sri Lanka.

Another major indication is the advancement in Container Availability Index (CAx) values at Nhava Sheva from 0.73 in week 21, the last week of May, to 0.76 in week 22. In the subsequent weeks, the CAx is likely to flit between these two numbers. CAx values of more than 0.5 mean that more shipping containers are joining the Indian ports, and there is less need for export boxes.

May also observed a peak in global container costs picking up around the globe for the first time this year to $2,330 for 20DC, and $4,410 for 40 high cube containers. Last year, trade — both exports and imports — was severely affected, with sea freight costs from China climbing as high as 200% and a huge container shortage.

Amid the crisis in Sri Lanka, the Indian subcontinent’s dependency on the port of Colombo is also being stressed. About 3 million twenty-foot equivalent unit (TEU) export-import (exim) cargo is routed from India through Colombo port yearly. Thus, it manages about 50% of Indian transshipment cargo.

CareEdge Ratings associate director Arunava Paul told the media that initial estimates indicate that 50,000 TEU-70,000 TEU of exim cargo are likely to be diverted to Indian ports during the April-June quarter of 2022. However, this is minuscule and includes only 2% of the total transshipment cargo routed from India.

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