Charge for shipping a container from India two times as that of China, report claims.
International Shipping from India could cost nearly twice as much as what it costs to ship the exact same container from China, based on a report from the Associated Chambers of Commerce and Industry of India.
In a press release , ASSOCHAM claimed the average cost of shipping a container from India could be nearly $1,200. The same container from China would ship for about $600, and for no more than $400 from Singapore, placing Indian exporters at a competitive disadvantage in the global industry.
There are a number of reasons for the higher costs, the group stated. One is that port efficiency in India lags behind much of the rest of the world. A ship’s turn-around time at India’s largest port, Jawaharlal Nehru, is nearly 36 hours, while at the main ports of Shanghai, Singapore, and Dubai, it is below 12 hrs, according to ASSOCHAM. India’s sea ports in addition have greater cargo-handling rates than those other countries around the world.
Further sending up costs is India’s 2-tiered tax system, which leads to goods being taxed when they transit state as well as national borders. The govt of recently chosen Pm Narendra Modi is trying to adjust the system by scrapping the two-tier system and replacing it with a consistent country wide tax.
Container charges are largely a factor of demand and supply of shipping capacity, but other factors for instance ease of access and landside costs can also figure into overall costs.
ASSOCHAM also noted the amount of stops a truck needs to make as another factor pushing up prices. There are one hundred and seventy seven road checkpoints and another 268 toll plazas on India’s roads, and toll lane automation is actually nonexistent.
A disparity in hinterland national infrastructure is yet another factor. According to the World Bank, 63.7 % of China’s roads are paved, as opposed to 53.8 % in India.
China and India have fragmented, unconsolidated trucking markets that make savings through economies of scale difficult to obtain. C.H. Robinson has predicted that 99 % of trucks in China are owned by individuals or families. In India, the logistics provider shows 80 % of trucks are operated by smallbusinesses.
The more sophisticated national infrastructure in China has made up for the governmental meddling and fractured trucking market that define both nations. The end result, ASSOCHAM claimed, is a tremendous difference in the costs of shipping containers from India and China.
Pm Modi’s government is apparently aware about these issues, and has begun to do something to improve things. Earlier this month, ground was broken on part of the Sagar Mala national infrastructure upgrade at the Jawaharlal Nehru port. Modi has additionally ordered the Ministry of Shipping to make Sagar Mala its primary goal, according to the Times of India .
The Sagar Mala project aims to improve India’s growth through the interlinking of ports via the growth and development of road, rail and seaway connections. Additionally, it needs investments geared towards expanding port capacity and efficiency.
Accompanying the order to the Ministry of Shipping was one to the Ministry of Road Transport and Highways. That order requested the introduction of a task force to study automation at Indian toll plazas and check points with the target of lessening setbacks and the number of overloaded trucks on Indian roads. Automation of toll roads was one of the solutions suggested by ASSOCHAM to lower shipping costs.