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Recently, farmers in Nagpur have been selling onions at a price as low as INR 3 per kg. The very cheap price is attributed to the abundant supply of produce in the domestic market and the plight of farmers is further aggravated by the drop in exports due to the global shortage of containers.
The global container shortage is not a recent phenomenon. The unusual situation is the result of the pandemic. So when did it all start? It dates back to 2020, when the world was under the spell of COVID-19.
China was the epicenter of the coronavirus and as the pandemic crawled out of the Asian country, the world went into lockdown, halting economic growth. Soon, factories closed, causing containers to be blocked at ports, prompting carriers to reduce the number of ships sent to sea. Empty containers were not picked up, and import and export was been seriously hampered. The reduction in the number of transport vessels operating as a result of the pandemic has led to a decrease in the number of empty containers picked up.
This was particularly important for Asian traders, who could not pick up empty containers from North America. As China began to recover from the pandemic, it resumed exports earlier than the rest of the world.
The report said the remaining containers in Asia headed to Europe and North America, but those containers did not return quickly. Labor disruptions and restrictions in North America have affected not only ports, but also cargo depots across the country. Without adequate staff, containers began to pile up and as borders tightened, customs became more complicated to clear, eventually leading to traffic jams.
What is it now?
Currently, the global supply chain has been aggravated by the ongoing geopolitical conflict due to the Russian-Ukrainian war. Experts believe this may lead to a new wave of container shortages as containers will pile up in some Russian and Ukrainian ports.
This impact on the global supply chain has resulted in transportation delays. Shipping operators are trying to add new containers to ease the capacity shortage, but boxes are stuck in ports.
Port congestion requires investment in inland logistics and infrastructure needs. According to a study, the problem cannot be solved by simply adding more capacity when it comes to ships and containers.
Businesses have been reeling from the shortage, but have found ways to deal with it. “After the COVID-19 pandemic, the world has seen unprecedented supply chain disruptions. Chip shortages and rising logistics and freight costs have had the most profound impact on industries. According to the Economic Survey 2021-22, some reports attribute rising freight costs to these supply chain headwinds in the form of shipping container shortages and increased trade costs. will continue for some time to come.As companies and countries explore alternative supply chain and logistics models, these factors will definitely challenge existing cost structures and push the boundaries of indigenization and operational efficiency,” said Ankit Agarwal, Managing Director of STL, in a previous interview with Entrepreneur India.
FMCG heavyweight Amul saw an opportunity in the situation. RS Sodhi, MD of Amul, told us in a previous interaction, “During this shortage of shipping containers and transport delays, we have found ways to be profitable. We have started exporting more to our neighboring countries In 2020-2021 we exported dairy products around us INR 520 crore and it increased to INR 1450 in 2021-22 There is no doubt that the shipping cost has increased but Due to low lead and transit time, many Asian countries preferred India for their imports and we saw a huge opportunity there.
As companies try to find solutions to mitigate the crisis, the domino effect continues. According to Glenn Koepke, GM Network Collaboration, FourKites, the Russian-Ukrainian war is expected to have a long-term impact on global container logistics.