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Sea freight rates down 15%, container availability better

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NEW DELHI : The availability of containers has improved, and ocean freight rates have fallen by up to 15%, exporters have said. Still, the volume growth in exports in the ongoing fiscal year may not be significant as the global inventory is high and key rates in world markets are rising, they added.

The Federation of Indian Export Organisations (FIEO) has pegged India’s merchandise exports in the current fiscal year at $475 billion, 14% higher than the previous financial year but much less compared to growth seen in FY22 over FY21.

In FY22, India’s merchandise exports rose by 43% over FY21 to $418 billion.

“In FY22, global markets created an inventory as commodity prices went up. Exports had gathered momentum after the second Covid-19 wave, but now due to inflationary pressure the volume growth of exports will be less,” said Ajay Sahai, Director-General of FIEO.

If the Russia-Ukraine conflict does not end soon, the dynamics might change, he said.

“As things stand today, India’s merchandise exports in FY23 may not cross $475 billion,” Sahai added.

Since the Chinese economy is opening up after four months of Covid-19 led lockdowns, Indian exporters will face more competition from China in the global markets, he said.

“Container availability has improved, and the freight cost has gone down by 10%-15%. We have to see how long this situation continues,” said Mahesh Desai, Chairman, Engineering Exports India.

“Once China becomes active, the container shortage may again emerge,” said Ravi Sehgal, Former Chairman of the Engineering Export Promotion Council of India.

While international container prices have increased by up to 15% on average in May, in India they have declined, similar to the trend observed in China. There has been a month-on-month decline in the prices of 40-foot containers in Chennai, to $4,015 in May from $4,044 in April. India recorded its highest-ever textiles and apparel exports at $44.4 billion in the financial year 2022, indicating an increase of 41% over FY21.

Export of ready-made garments was at $16 billion with a 36% share in FY22, up 31% against the previous year.

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