Global freight costs up by 100-200%, J&K imports-exports feel the pinch

Srinagar, March 10: As global freight shipping costs have increased between 100-200%, many exporters in the country, and also from Jammu & Kashmir, are losing business in a big way.

According to the latest data avaliable, freight cost to both Europe and the US have increased by 100 per cent, and to places such as American West Coast and the UK there is an increase of over 200 per cent over the last quarter.

Although J&K has limited export basket, those exporters who export heavy weight products like apples, carpets, etc are feeling the pinch.

“It has happened all of a sudden. We did not expect the rates to increase so much. This increase has hit our export plans and our profitability would be badly hit”, Muhammad Amin, a carpet exporter told Ziraat Times.

Makrand Appalwar, MD of speciality packaging firm Emmbi Industries told FE Online, “We do a lot of business in South America. The cost of a 40 foot high cube container from India was around $4,000 for the entire fare about four months back. Now it has increased to $10,000.”

Apple exporters and importers of a variety of products from different countries in Asia and European continents face similar situation. Srinagar-Jammu transportation cost rise, due to the bad condition of the road, has already hit exporters and importers of Kashmir badly.

According to experts in shipping, firms in the US and Europe import from India because of the cost arbitrage. But, countries like South America, East Europe have similar labour cost structures as India and import from the country due to technology and ease of operation. Appalwar said many buyers are not ready to make long term commitments for import.

“My buyer in South America is already saying the cost from India is getting difficult to manage so they are contemplating moving to Romania or Turkey.”

Milan Thakkar, CEO of construction material manufacturing firm Walplast said he too is losing export orders. “We somehow continued to manage our business in the Middle East despite the freight rate hike. But we lost our business in West Africa and few Far East countries where the cost has gone up by more than 400 per cent.” He says, for these countries on an average the cost of shipping has increased by more than 200 per cent over last year.

There has been a shortage of containers since the last year due to the disruption in the supply chain caused by the pandemic. But, as demand is growing, the exporters are finding it difficult to book space on vessels. In addition, the fuel price growth that started at the end of last year is also influencing the rates.

With inputs from FE