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With sharp global economic recovery, will global container shortage pose a formidable challenge?

With sharp global economic recovery, will global container shortage pose a formidable challenge?

Many experts believe that with booming demand, this problem of container shortage is here to stay, and there are chances that after Christmas and New Year, when the countries will open up, the problem can escalate even further.

To ease the container shortage in the country, recently, the government announced a three-month extension for re-export of containers without attracting import duty. To ease the container shortage in the country, recently, the government announced a three-month extension for re-export of containers without attracting import duty.

Amid the Covid-19 pandemic, the one perennial problem that is troubling the export sector is the constant shortage of containers. With the global economy clawing back to normalcy, the surge in demand and consumption is leading to a rise in exports, which are bound to go even further. But amid dipping Covid-19 cases and the global economic revival, the container shortage is still prevalent and is haunting the exporters in India as well as the world. With the intervention of shipping companies and the government, the situation has improved but the problem is still prevalent and is expected to get worse in the next few months.

India's merchandise exports jumped 21.35 per cent to $33.44 billion in September on a year-on-year basis, mainly due to better performance by key sectors like engineering goods and petroleum products. However, in August 2021, India's merchandise exports soared 45.17 per cent to $33.14 billion in August 2021 compared to $22.83 billion in the same month last year over robust demand from other countries.  
 
"Right now, the shortage of containers is easing out. Most of the supplies for Christmas and New Year have already taken place. That is why I think there is less pressure for Christmas and New Year as compared to a month ago," Ajay Sahai, director of the Federation of Indian Export Organisation said.

"I think we are in a very comfortable position, how long it's going to last that is an issue. Because again from January onwards, once Europe and US open, there may be an increase in pressure on containers. So the situation is better off but far from normal. Also, the imports are rising which means more containers will be coming to India," Sahai added.

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To ease the container shortage in the country, recently, the government announced a three-month extension for re-export of containers without attracting import duty to prevent the export of empty containers. In a normal situation, containers that are kept in the country beyond six months attract import duty to promote a faster turnaround. In addition to the steps taken by the government, the private players are also working to ease the situation of containers in the country, Maersk, the world's largest shipping line company, repositioned empty containers like never before, with 215,000 containers repositioned in the first 8 months of 2021 in India. Since July 2020, the company has also in-fleeted 660,000 new containers, which is also partly helping in overcoming the shortage of containers.

Bhavik Mota, director, Regional Ocean Management, West and Central Asia, Maersk, said that with all short-term and structural solution steps, the availability of containers will get better, also, the dwell time is reduced up to 1.5 days making more containers available for our customers.

At the end of the second quarter of 2021, the global container fleet stood at 24.4 million TEU, which is an increase of 4.3 per cent compared to the second quarter of 2020. However, the idle fleet declined further in the second quarter of 2021 compared to the first quarter of 2021.

Many experts believe that with booming demand, this problem of container shortage is here to stay, and there are chances that after Christmas and New Year, when the countries will open up, the problem can escalate even further.

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