Surging shipping costs give companies a sinking feeling
freight rates have soared around 105% in the past three months and a severe container shortage is hurting industries from agriculture to automotive.
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The Red Sea crisis has worsened supply chain disruptions, affecting food shipments, too. JSW Infrastructure expects relief from spiralling freight rates in 4-6 weeks, while Adani Ports and Special Economic (APSEZ) predicts sustained challenges through the upcoming season.
Spot freight rates have skyrocketed since the start of this fiscal to $5,806 per 40 freight ton (ft) as of July 25, according to Drewry's World Container Index (WCI). It is, however, still lower than the Covid-era peak of $10,377 per 40ft in September 2021.
However, according to companies, the mix of strong consumer demand, supply chain disruptions, and equipment shortages are reminiscent of disruptions seen during the pandemic.
The container shortage has started to impact companies in the auto sector.
Echoing concerns about the current scenario, Bajaj Auto, the country's largest exporter of motorcycles and three-wheelers, compared it to the pandemic-era challenges. «The situation is as severe as it was during Covid times, if not more. In the last six months, freight rates to most destinations in Latin America and Africa have doubled. Availability of containers is also an issue,» said Rakesh Sharma, executive director, Bajaj Auto.
Bajaj Auto
