In a press release , ASSOCHAM mentioned the average cost of shipping a container from India could be roughly $1,200. The very same container from China would ship for about $600, and for just $400 from Singapore, putting Indian exporters at a competitive disadvantage in the worldwide market.
There are lots of reasons for the higher costs, the group said. One is that port proficiency in India lags behind most of the world. A ship’s turnaround time at India’s biggest sea port, Jawaharlal Nehru, is around 36 hrs, whilst at the main sea ports of Shanghai, Singapore, and Dubai, it is less than 12 hrs, according to ASSOCHAM. India’s ports in addition have greater cargo-handling charges compared to those other countries around the world.
Further driving up expenses is India’s 2-tiered tax system, which results in items being taxed when they transit state as well as national borders. The govt of newly picked Prime Minister Narendra Modi is trying to alter the system by scrapping the two-tier system and changing it with a standard national tax.
Container rates are largely a factor of demand and supply of shipping capacity, however additional factors like ease of access and landside costs may figure into total costs.
ASSOCHAM also identified the number of stops a truck has to make as another factor pushing up costs. There are currently one hundred and seventy seven road checkpoints as well as two hundred and sixty eight toll plazas on India’s roadways, and toll lane automation is virtually non-existent.
An imbalance in hinterland infrastructure is an additional factor. According to the World Bank, 63.7 percent of China’s roads are paved, compared to 53.8 percent in India.
China and India both have fragmented, unconsolidated trucking markets that make savings through economies of scale not easy to obtain. C.H. Robinson has predicted that 99 % of trucks in China belong to individuals or families. In India, the logistics provider estimates 80 % of trucks are operated by small companies.
The more advanced infrastructure in China has made up for the governmental meddling and fractured trucking market that define both nations. The final result, ASSOCHAM mentioned, is a large difference in the costs of shipping containers from China and India.
Pm Modi’s government looks to be alert to these problems, and has begun to take action 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 main goal, according to the Times of India .
The Sagar Mala project aspires to boost India’s growth through the interlinking of sea ports via the continuing development of road, rail and seaway connections. It also demands investments geared towards increasing port capacity and efficiency.
Accompanying the order to the Ministry of Shipping was one to the Ministry of Road Transport and Highways. That order called for the development of a task force to research automation at Indian toll plazas and check points with the aim of minimizing setbacks and the amount of overloaded trucks on Indian roads. Automation of toll roads was one of the solutions recommended by ASSOCHAM to reduce shipping costs.
