Shipping sector will recover fast; container freight rates may rise: Allcargo Logistics

The Suez Canal blockage has finally been cleared with the massive container ship, Ever Given being refloated. The blockage resulted in over 200 ships being stalled or redirected. Many experts feel that the repercussions of the blockage will be felt for months because of delayed shipments and order backlogs.

Shashi Kiran Shetty, Group Chairman of Allcargo Logistics, is in the camp that feels the problem may not persist for long.

“The disruption due to this blockage will be over in a short time. I think the shipping world will recover pretty fast, I don’t see a major challenge going forward,” he said in an interview to CNBC-TV18.

“The impact is – about 2 percent of the container ships, fleet has been taken away temporarily. The trade between Asian and Europe, North America and East coast of United States and Canada are the ones which have experienced supply chain disruptions and about 400 ships are waiting,” he said.

“Now the movement of about 70-80 ships will happen every day,” he said, adding that some cargo has also been cleared by air.

He believes this blockage will have an impact on the container shortage and short supply of ships will lead to increase in ocean freight which was showing a downward trend so far. “This will have some impact on the freight rates going up on the container side,” he stated.

On his company’s performance, Shetty said, “Our business has been fairly stable. We have improved our overall volume during the crisis. We expanded into new products which we launched on the full container load and also on the air freight – we have also launched air freight services out of China to US and Latin America. So all those contributed significantly. We are at pretty healthy stage right now.”

On synergies with Gati, he said, “Gati is on the right track. It is the most exciting sectors in the logistics market. Gati does express transportation, it is involved in warehousing management, it is also involved in air freight and last mile deliveries and pickups. We have been able to bring down the debt of the company, our contingent liability has come down substantially.”

“We are exploring (a bid for )Container Corporation of India (CONCOR),” he said. CONCOR is among the companies listed for divestment by the government.

Shetty said Allcargo will delist from the bourses in FY22.

Source:CNBC TV18