Container shortage, rising freight rates hit pharmaceutical exports

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Shortage of empty containers, particularly reefer containers, and an almost 60 per cent surge in freight rates since October have hit export of pharmaceutical shipments from India.

The Indian Drug Manufacturers Association said that ports in southern India have borne the brunt of box shortage prevailing over the last 7-8 months and have urged the Commerce Ministry to intervene and help tide over the crisis.

The shortage of boxes, according to the association, has led to a rise in freight rates by almost 60 per cent.

SV Veerramani, past national president of the Association, told BusinessLine that the rates for 40 feet containers have gone up from $3,800 to $8,600 for shipments to Cameroon and from $6,600 to $11800 for shipments to Burkino Faso in West Africa. Reefer containers are not readily available and have to be booked at least 15 days in advance, he said. The freight rates have also gone up from $3,300 to $5,600 for shipments to the UK.

All these have affected the smooth movement of pharma exports, he said.

Though the situation has slightly improved at least in terms of dry containers, the shipping lines have increased their freight rates by 60 per cent or more, he said.

The box shortage has forced many pharma exporters to pay higher prices for containers to meet their export commitments, which is adding to their cost and reducing their margins.

Govt intervention sought
IDMA and Pharmaceuticals Export Promotion Council (Pharmexcil) have asked the Commerce Ministry to sort out the issue, he said.

Revi Uday Bhaskar, Director General of Pharmexcil, told BusinesLine that the issue of container shortage has been felt in almost all sectors and pharmaceutical is no exception. There is a shortage of boxes since the past 7-8 months and the issue has been taken up with the ministries concerned. The government is working on resolving the crisis at the earliest, he said.

Veeramani, who is also the Chairman and Managing Director, Fourrts (India) Laboratories, said despite the challenges, pharma exports grew by about 15 per cent in FY21 to reach $23.5 billion from $20.5 billion the previous year.

However, he was sceptical about the sector improving on its FY21 performance in the current fiscal in the face of the logistical issues.

Source: The Hindu Business Line

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