Shortage of sea containers hits TN tea exports

The global shortage of sea containers has dealt a entire body blow to tea exports from Tamil Nadu – a single of the greatest tea exporting States in India. The shortage has spiked the freight costs by means of the roof, so considerably so that transportation price is now equal to the price of the cargo transported in the container. Exporters are nonetheless shipping and delivery their inventory, despite the decline, just to keep their consumers with whom they have been working with for many years.

The shortage started off previous year due to Covid-19 pandemic but the Suez Canal blockade and closure of substantial Chinese ports due to virus spread early this year aggravated the problem mostly in the US and Chinese ports. As on Thursday, close to sixty five substantial container vessels were being waiting in queue outdoors Los Angeles/Lengthy Seashore and close to twenty five outdoors Savannah (in the East Coastline). In China, over 240 container vessels are waiting outdoors numerous ports. This is disrupting the logistics globally.

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Each individual year, close to four,000 containers (40-toes) of tea are exported from Tamil Nadu to numerous locations, together with the EU US Russia and China. In December 2020, freight prices to Rotterdam from Kochi was $one,950, but it is now $seven,800, stated Rahul Shukla, Director, SSK Exports Ltd, Coimbatore, a foremost tea exporter. “Early this year, we signed an agreement to deliver tea at a freight of $three,000 to Rotterdam but currently the price is $8,000. We require to bear the more $5,000 (₹3.5 lakhs) foremost to large decline alternatively of building a small earnings,” he stated.

Freight prices

Freight to US port Savannah in December 2020 was $three,000 for a 40-toes container but currently it is about $fifteen,000, and that there is no ensure of box availability, stated Dipak Shah, Director of Crystal Tea, and Chairman of the South India Tea Exporters’ Association. “We are shipping and delivery at a large decline as we don’t’ want to get rid of our important consumers. As soon as we get rid of them, it is very tricky to get them back,” he stated. “We ordinarily deliver cargo by using Kochi or Thoothukudi ports. Even so, due to non-availability of boxes, we are forced to go to Nhava Sheva or Mundra for a single or two boxes. For three months, we have been waiting for boxes,” stated Shah.

A senior tea planter, N Lakshmanan, Director of the Coonoor-based Golden Hills Estates Ltd, stated that the escalation in the freight prices is not the similar involving the CIF contracts and FOB contracts. ”The nexus involving a substantial importer and the shipping and delivery organizations are diverse and they are trade dictums which are rarely made public,” he stated. Producers who had contracted on CIF phrases will be the worst afflicted and the natural way they dump the overall quantity in the auction system. The exportable commodity very almost never receives appreciated in the inside sector, he included.

Sriram Narayanaswamy, Senior Tea Auctioneer in Coimbatore, stated that due to freight escalation, it is very tricky for an individual to give a cost for the tea in the auction. Southern India produces close to 230 million kg of tea annually, of which a hundred and twenty million kg is from Tamil Nadu created mostly in the Nilgiris, Gudalur and Valparai. Approximately fifty per cent of it is exported, he stated.

Even though there is no visibility as to how extensive this lean stage will proceed, the tea marketplace is grappling to obtain a solution, he included.