Singapore — Container space tightness in India is expected to ease from September as imports rebound after a nationwide lockdown to contain the coronavirus, delivering more containers to India's ports, market sources said.
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The lack of container availability saw India's container freight rates surge up to 67% in July and early August on some routes as a rash of cancelled sailings and a decrease in imports during the country's prolonged lockdown from late March reduced the number of containers arriving at India ports.
However, cancelled sailings are on a downtrend in August after peaking in May, when 23% or 100 of the 439 typical sailings were voided, according to maritime intelligence company eeSea.
It sees the percentage of voided sailings in India falling to 3% in September, with 11 of the 421 standard sailings slated to be cancelled.
September's available container capacity is expected to rise 7% year on year, snapping six straight months of lower-than-usual capacities, eeSea said, noting available capacity in May was down 22% on year.
However, eeSea's founder Simon Sundboell noted these projected sailings figures could change as carriers become more flexible about cancelling or adding sailings at short notice than they were a year ago.
"Whereas in the past we would consider September a 'done deal', meaning all blanks [are] communicated by now, we [are still seeing] changes to September today," he said.
Meanwhile, an uptick in imports – and a resultant increase in vessels calling on India – is also supporting the rise in container space. India, which is typically a net importer, turned net exporter for the first time in a decade amid the drop in imports during the lockdown.
"With the opening up of the economy, we expected a surge in exports. I think this will normalize in the next two months and we will be back to balanced trade," said Karan Adani, CEO Adani Ports, during an Aug. 11 earnings call.
A freight forwarder said easing bottlenecks could also improve trade flows.
"Industries had a total shutdown during the lockdown period so they did not have means or need to continue imports. Now lockdown has eased, the economy is reviving so imports are likely to pick up with the revival in industrial activity," said Sanjay Dhingra, Partner, Asia Transport Co, a freight forwarding company.
In addition, displaced demand for container space from previously firm air freight prices could dissipate. The source noted that air freight prices had nearly doubled earlier in the year, which made shipping container costs more attractive, creating a new source of demand - and also contributing to the tightness in container space seen earlier.
"Prices may ease further if normalcy returns to air cargo operations," he said.