Shortage of workers, choked ports disrupt supply chains
At least 50,000 shipping containers have been lying orphaned at container freight stations and private container terminals at three large ports in Tamil Nadu with no trucks available to transport them.
Most Indian ports have declared a so-called force majeure -- declared when unprecedented events overtake them and prevent them from doing their job .
At ports across India, cargo terminals are operating at capacities less than 30%. On April 3, in a video conference with Union minister of shipping Mansukh Mandaviya, port operators, importers, and shipping companies raised some of these issues, including the unavailability of trucks (and drivers), the shortage of workers in ports and cargo terminals, and choked ports .
The 21-day lockdown enforced by India on March 25 -- it ends midnight April 14; the Prime Minister is to address the nation on Tuesday morning on whether it will be extended and if so, fully or in part; several states have already extended it till the end of the month -- has hit the handling of cargo across Indian ports, choking shipping lines.
There has been a shortage of workers to handle cargo and a dearth of truck drivers to ferry the cargo to factories leading to a huge inventory pile up at ports. The Centre’s move to waive demurrage charges during the lockdown is acting as a disincentive for importers to figure out ways to move cargo.
The closure of factories has also left cargo grounded (or in ships in anchorage) . India’s 7,516.6 km long coastline caters to more than 90% of India’s trading by volume.
The statistics are worrying because a snag in the supply chain could stoke distress.
Cargo volumes at the Indian ports were already witnessing some slowdown in FY2020 on the back of various factors such as the US-China trade war and the ongoing economic slowdown, according to credit rating agency ICRA. Bottlenecks in the shipping and logistics part of the supply chain, which are critical for timely movement and evacuation from ports, could be an aggravating factor, the firm noted.
Manufacturers whose companies aren’t producing anything “aren’t taking deliveries” of imports, said FIEO director general Ajay Sahai. The Federation of Indian Export Organisations is India’s apex export promotion body.
“The ports are choking with imports. There is no place to put the containers. There is no unloading happening at factories. The entire import and export trade is a chain activity and even if link is missing, the entire chain gets disrupted,” he added.
Sahai listed the problems: courier companies that are not working during the lockdown; factories that are unoperational; customs and ports that are working but a fraction of capacity . “You can’t force people to come to work. Supply chain disruption will continue once factories start even in a limited way,” Sahai said.
In a letter written to the home ministry on Sunday, the commerce ministry proposed allowing companies operating large factories making textiles, automobiles, electronics, cement, and fertilisers to restart operations with proper sanitation and distancing norms in place. It suggested restricting their capacities to 20-25% in a single shift to start with.
“Commerce ministry has sent the government recommendation on allowing certain industries. The Industry also does not have liquidity to pay for duties. There is a huge mismatch of imports and exports right now. Exports have gone down, there are no containers for exports and labour left for loading. The key is to allow some industrial activity, then also ease liquidity as well to the industry. At present there are no incentives to clear the consignment.” Sahai explained.
Earlier this month, the ministry advised major ports to invoke force majeure. This means, for existing and operational projects, the Major Ports can permit waiver of all penal consequences on a case-to-case basis along with deferment of certain performance obligations under the relevant provisions of a concession agreement.
The Centre has issued several orders to states asking them to allow movement of all transport vehicles. Centre on Sunday has again asked states to ensure smooth transportation of all inter-state and intra-state goods movement amid concerns of shortage of supply.
Tens of thousands of trucks have been left stranded across state borders since the lockdown took effect on March 25. The government has issued several advisories to state chief secretaries that movement of both essential and non-essential goods be allowed, seeking to avoid shortages.
To address the snag, ports are also encouraging transportation of goods by railways. The national carrier has been operating freight trains since the suspension of passenger trains during the lockdown.
“ As of now we are operating at 70% of our capacity. On the shipping side cargo operations are running on the normal side, down by about 20% there are some challenges in movement to container and where to store the goods and organise labour. The issues is factories have also closed right now. We are hoping it will get better slowly as factories are allowed to open. There is substantial movement happening through rail right now ,” said Kolkata Port Trust (KoPT) chairman Vinit Kumar.