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Small export-import players face the brunt of China trade barrier

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Munshid Ali, partner of Kozhikode-based Ceekey Tyres, who imports tyres through his office in Foshan City, Guangdong Province, China, now finds his business disrupted after the government imposed trade restrictions on Beijing.

In Kochi, Ashik Usman, partner, Royal Export Enterprises, was recently asked to pay Rs 7.79 lakh by his shipping company as detention charges for a consignment of dates from Iran. The rate is an increase from the normal rate of Rs 7,000, citing a lack of empty containers.

The troubles faced by the two businessmen in the state sum up the larger mess that the small traders in the export-import business are facing in the aftermath of the Covid-19 outbreak,  coupled with India’s clampdown on trade with China.

“After the coronavirus outbreak, many countries were in lockdown during March-April. As economic activity came down, the number of port labourers also decreased. That caused a reduction in cargo movement, and some factories were closed temporarily. And a large amount of cargo was stuck at ports. Therefore, shipping companies reduced the number of ships to stabilise costs,” said Biju Raman, partner, Sreetrans Logistics (India).

The ocean freight rates have shot up fivefold in the aftermath of the Covid-19 pandemic, industry representatives said. The freight rate from Kochi to Europe increased from USD 500 to 1,750 (20ft containers) and USD 750 to 2,600 (40ft containers); to the USA from USD 1,900 to 3,600 (20ft containers), USD 2,500 to 4,700 (40ft containers). The rate to Dubai increased from USD 25 to 175. Though shipping lines quote USD 600 (earlier USD 200) for 40-foot containers, officials said there are no lines having 40ft equipment.

“As per our understanding, a drop in import volumes, buoyant export volumes and the delays caused by the congestion in Colombo port seem to have combined to create an empty container shortage. This is the situation across India as well as in many parts of the world,” said Praveen Joseph, CEO, DP World Cochin in an interview recently.

Royal Exports’ Usman said, following a request from the company, the shipping liner reduced the detention charges to USD 250.

Not just tyres, but import of tiles and electric goods — like LED bulbs — are also hit, impacting small traders.

Ali, who is also on FICCI’s national advisory council for ports and infrastructure, said by banning import of tyres, the centre has allowed six leading tyre companies to control the business in India.

“Even after importing tyres by paying all the duties, we could get a margin as the Indian tyre prices are higher. Now, they will start hiking the tyre prices in the coming days,” he said.

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