Supply Chain Experts hopeful of surge in orders and bookings in Q3 amidst India’s Pro-Export Drive

  • Inbound containers at Indian ports witness significant increase in January-May 2023, indicated by Container xChange data
  • Container Availability index (CAx) consistently exceeds 0.80 threshold, pointing to rising inbound container numbers
  • Optimism prevails for export growth rebounding from July onward, driven by fresh orders and bookings for the festival and new year season
  • Average pickup charges on India-US trade route experience a substantial increase, reaching $425 in April 2023 from $11 in September 2023

Hamburg, Germany, 26 May 2023: According to data provided by Container xChange, the leading online container logistics platform, there has been a significant increase in the number of inbound containers at Indian ports in January – May 2023. The average Container Availability index (CAx) value has consistently remained above the 0.80 threshold since last month and has maintained a value over 0.75 since the beginning of the year.

This surge in inbound containers can be attributed to a decline in demand for outbound containers, resulting in a higher CAx value as illustrated in Fig.1 and Fig.2 below.

Fig.1: Average CAx value for 40 HC Containers at ports of Chennai, Nhava Sheva, and Mundra

Fig.2: Average CAx value for 20 DC Containers at ports of Chennai, Nhava Sheva, and Mundra

Understanding CAx Value: When the CAx value is 0.5, the number of containers filled with cargo leaving and entering a port in a week is the same. If the CAx value is above 0.5, it means that more containers with cargo are entering the port, while if it’s below 0.5, more containers with cargo are leaving the port.

Low CAx values observed consistently for several weeks indicate a shortage of containers, while high CAx values over an extended period imply that there is an excess of containers at a specific port.

This could well be corroborated by the rising imports in the country, causing a higher number of container equipment entering the ports leading to overcapacity of containers.

“The Indian economy has been persistently prioritizing the promotion of exports, driving economic momentum. However, container traders, shippers, and carriers in India are experiencing a slowdown in containerized exports. There is a noticeable decline in consumer demand from the USA, EU and UK markets. This trend has had an impact on the volume of orders received by exporters. “, said Mr Supal Shah, CEO, ARCON Containers.

In April, the initial month of the fiscal year 2023-24, Indian merchandise exports experienced a significant decline of 13% compared to the previous year, amounting to US$35 billion, as per data provided by the Ministry of Commerce & Industry of India. This decline is the sharpest monthly drop observed in the past three years, indicating a notable setback in export performance.

The Indian government is pushing pro-export industry groups to maximize shipments to scale-up annual trade volumes.

Analysing the current market scenario, Christian Roeloffs, CEO & Co-Founder said, “Despite the export slowdown in India, there is optimism that export growth will rebound starting in July this year. The third quarter of the calendar year is expected to bring improvements as fresh orders and bookings increase in preparation for the upcoming festival and new year season. Industry stakeholders are hopeful that this positive trend will drive a resurgence in containerized exports and contribute to the overall growth of the Indian economy.”

India is emerging as a very interesting destination for container transshipments and the government’s support in form of initiatives is commendable.

The average container price for 40 HC containers in India has slowed down as compared to last year same time. With a 43.4% year-on-year dip from $4195 in April 2022 to $2374 in April 2023, the prices have almost halved.

Fig.3: Average container price value for 40 HC Containers at ports of Chennai, Nhava Sheva, and Mundra

20 DC containers average container price in India also saw a similar slowdown as compared to last year same time. There has been a 41% dip from $2213 in April 2022 to $1305 in April 2023, the prices have almost halved.

Fig.4: Average container price value for 20 DC Containers at ports of Chennai, Nhava Sheva, and Mundra

Average pickup charges on the India-US trade route have seen a substantial increase in the past 3 quarters, currently at $425 in April 2023 sliding up from 11$ in September 2023. This indicates a greater demand for containers from the country.

Fig.5: Average pickup charge for 40 HC & 20 DC Containers at ports of Chennai, Nhava Sheva, and Mundra

This can be corroborated by the strengthening economic relationship between India and the United States, resulting in the U.S. emerging as India’s largest trading partner in the fiscal year 2022-23. According to provisional data from the Commerce Ministry of India, bilateral trade between the two countries witnessed a significant increase of 7.65%, reaching $128.55 billion in 2022-23 compared to $119.5 billion in the previous fiscal year. This marks a notable growth from $80.51 billion in 2020-21. The data also reveals that exports to the U.S. experienced a moderate rise of 2.81% to $78.31 billion in 2022-23 compared to $76.18 billion in 2021-22, while imports surged by approximately 16% to $50.24 billion.

Further, according to the Ministry of Ports, Shipping and Waterways of India, the major ports in the country witnessed a record-breaking cargo handling of 795 million metric tonnes in the fiscal year 2022-23. This marked a significant increase of 10 percent compared to the previous year’s cargo volume.