In a recent report, the Global Trade Research Initiative (GTRI) has said that freight costs for Indian exporters shipping goods to Europe and the US have more than doubled in the past year, driven by disruptions in the Red Sea. Last month, delays in ship arrivals at India port were caused by congestion at Singapore port.
Indian exporters may soon face another disruption if the US-China trade war escalates in the coming months. The global container shortage—first triggered by the pandemic—may soon re-emerge, causing severe difficulties for Indian exporters. India must invest in container production and domestic shipping to minimise trade disruptions due to the US-China trade war escalation and other geopolitical events.
The think tank added that by increasing domestic container production and enhancing the role of Indian shipping firms in carrying its export and import cargo, India could reduce its vulnerability to global supply chain disruptions and strengthen its position in the international trade landscape.
Container Shortages And High Freight
There have been unverified reports of China hoarding containers to maximise its exports to the US and Europe ahead of potential trade restrictions on solar panels, electric vehicles, steel and aluminium etc. manufactured by Chinese firms located in China or elsewhere like in ASEAN countries.
However, according to the report, “The real container shortage issue likely stems from broader logistical inefficiencies like port congestions, red sea disruptions rather than deliberate stockpiling.”
Between 2022 and 2024, shipping rates for a 40-foot container have fluctuated significantly. In 2022, the average cost was USD 4,942 due to the lingering effects of the pandemic, while by 2024, the rate had stabilized around USD 4,775. These rates are still significantly higher than pre-pandemic levels, where the cost was USD 1,420 in 2019. The elevated freight rates reflect the persistent supply chain challenges that continue to burden global trade.
GTRI stated that India’s dependence on major shipping hubs and foreign carriers significantly increases costs and risks.
It stated that 90 to 95 per cent of India's cargo is transported by foreign shipping liners, giving them control over access and freight rates, and limiting India's ability to manage costs and schedules. About 25 per cent of India's cargo is transshipped through hubs like Colombo, Singapore, and Klang, increasing transit time and freight costs. Third, India depends heavily on containers made in China, making it vulnerable to supply disruptions and price fluctuations.
India’s Container Manufacturing Sector
GTRI also mentioned that the shipping container industry is critical to global trade, and India has been making efforts to expand its container production. However, current output is insufficient to meet growing demand. India produces between 10,000 and 30,000 containers annually, while China, the global leader, produces around 2.5 to 3 million containers per year.
It stated, "This leaves India with less than 1 per cent of the global market share, making it vulnerable to disruptions in container availability.
The ownership of shipping containers is dominated by major shipping lines and leasing companies with a negligible share of India. Companies like Maersk (Denmark), Mediterranean Shipping Company (Switzerland), and CMA CGM (France) are among the top owners of containers, with millions of Twenty-foot Equivalent Units (TEUs) in their fleets. Additionally, China’s state-owned shipping giant, COSCO, holds a significant share of global container ownership.
Indian manufacturers face production costs of USD 3,500 to USD 4,000 per 40-foot container, which is higher than China’s cost of USD 2,500 to US$ 3,000. As a result, Indian businesses remain dependent on imported containers, primarily from China. This reliance makes the country susceptible to global supply chain disruptions.
Key production hubs in India are emerging in Bhavnagar (Gujarat) and Chennai (Tamil Nadu), but significant investments and policy support are required to scale up container production, the report said. Expanding this industry would reduce dependence on imports, especially during global shortages, and strengthen India's position in global trade logistics.
Meanwhile, the report also revealed that in addition to container shortages, India is heavily dependent on foreign shipping companies for its international trade. Approximately 90 to 95 per cent of India’s total cargo is carried by foreign lines, such as Maersk, MSC, and COSCO. Indian shipping companies, led by the Shipping Corporation of India (SCI), handle only about 5 to 10 per cent of trade by volume.
This reliance on foreign shipping exposes India to rising freight costs, geopolitical risks, and logistical uncertainties. With escalating trade tensions between the US and China and the increasing cost of shipping, India must urgently develop its domestic shipping industry to handle a larger share of its export and import cargo, GTRI stated.
