Tuesday, 14 October 2014

Cost of shipping a container from India two times as that of China, report reveals.

Shipping a container from India can cost nearly double what it costs to ship the exact same container from China, according to a report from the Associated Chambers of Commerce and Industry of India.

In a pr release , ASSOCHAM mentioned the standard cost of shipping a container from India could be almost $1,200. The very same container from China would ship no less than $600, and for just $400 from Singapore, placing Indian exporters at a competitive disadvantage in the international industry.

There are a lot of reasons for the greater charges, the group mentioned. One is that port efficiency in India lags behind much of the rest of the world. A ship’s turnaround time at India’s largest port, Jawaharlal Nehru, is nearly 36 hours, while at the main sea ports of Shanghai, Singapore, and Dubai, it is below 12 hours, according to ASSOCHAM. India’s sea ports in addition have increased cargo-handling costs than those other nations.

Further driving up rates is India’s 2-tiered tax system, which leads to items being taxed when they transit state as well as national borders. The govt of newly selected Pm Narendra Modi is trying to alter the system by scrapping the two-tier system and changing it with a consistent nationwide tax.

Container charges are largely a factor of demand and supply of shipping capacity, however other factors such as ease of access and landside costs might also figure into the overall costs.

ASSOCHAM also noted the amount of stops a truck needs to make as another factor pushing up prices. There are currently 177 highway checkpoints and another 268 toll plazas on India’s roads, and toll lane automation is actually nonexistent.

A imbalance in hinterland national infrastructure is another factor. As reported by the World Bank, 63.7 percent of China’s roadways are paved, compared to 53.8 % in India.

China and India have fragmented, unconsolidated trucking markets that make savings through economies of scale challenging to obtain. C.H. Robinson has predicted that 99 % of trucks in China belong to individuals or families. In India, the logistics provider reports 80 percent of trucks are run by small companies.

The more advanced national infrastructure in China has made up for the governmental meddling and fractured trucking market that define both nations. The final result, ASSOCHAM stated, is a major difference in the costs of international shipping from India and China.

Prime Minister Modi’s government appears to be aware of these problems, and has begun to take steps to improve things. Early this month, ground was broken on part of the Sagar Mala infrastructure upgrade at the Jawaharlal Nehru port. Modi has additionally instructed the Ministry of Shipping to make Sagar Mala its principal priority, as reported by the Times of India .

The Sagar Mala project aims to improve India’s growth through the interlinking of sea ports via the continuing development of road, rail and seaway connections. In addition, it requires investments aimed towards expanding port capacity and productiveness.

Accompanying the order to the Ministry of Shipping was one to the Ministry of Road Transport and Highways. That order requested for the development of a task force to examine automation at Indian toll plazas and checkpoints with the target of minimizing setbacks and the amount of overloaded trucks on Indian roads. Automation of toll roads was one of several solutions suggested by ASSOCHAM to lessen shipping costs.

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