India's shipping industry is in a bind. Exporters are battling container shortages and skyrocketing freight costs,driven by global tensions and infrastructure snags. Government's stepping in with a ₹10,000 crore plan to ramp up domestic container production .
Iran usually buys about 4.5 million tonnes of Indian basmati rice annually. But recent conflicts have snarled shipping routes, especially through Strait of Hormuz. Prem Garg from the Indian Rice Exporters Federation said vessel availability from Kandla or Mumbai to Iran has nosedived,complicating logistics.
A 20-foot container carrying 26.5 tonnes of rice now costs around $5,000 to book. Garg said the unpredictability of vessel availability adds to the costs. R. Rajeshkumar of the Custom Broker and Shipping Agents Association in Coimbatore shared a case where a customer was hit with a $50,000 bill for an empty container initially booked for $1,500 from Kochi to Iraq .
Coffee exports face similar issues. Ramesh Rajah from Coffee Exporters Association of India pointed out many coffee shipments now detour around Cape of Good Hope instead of the Suez Canal. This adds 10 to 22 days to journey and has pushed freight costs from roughly $1,200 before the crisis to $3,800 .
Across sectors,exporters are dealing with fewer mother vessels and rising costs. Large container ships calling at Thoothukudi and Kochi have dropped since COVID-19. Now,more are docking at Nhava Sheva, where costs are about 50% lower than at southern ports.
As a result, over 40% of cargo that once moved through Thoothukudi or Kochi is now routed through Nhava Sheva. P. Subramaniam,former president of Customs Broker Association in Coimbatore,noted that Nhava Sheva's time and cost efficiency are driving this shift.
Infrastructure woes add to mess. Vallarpadam is still years from full capacity,and Thoothukudi's future for larger vessels depends on its ₹15,000 crore Outer Harbour Project. Meanwhile,Vizhinjam mainly handles EXIM cargo due to connectivity issues.
Freight rates keep climbing. For example, shipping a container from Kochi to Jebel Ali has jumped from $1,000-$1,500 to almost $7,000, with $500 hike in just three days. Rajeshkumar mentioned that Chinese exporters have easier time securing containers due to stronger demand,leaving Indian exporters struggling to book or retrieve empty containers stuck in hubs like Dubai and Khor Fakkan.
Amitabh Kumar,former Director General of Shipping, called the crisis structural,pointing to five major disruptions this decade, including COVID-19 and the Ukraine conflict . Container shipping operates on fixed schedules,and when routes become unsafe,ships are forced to divert,often adding 10 to 12 days to their voyages. Shipping lines prioritize their busiest routes,especially those serving China.
Kumar emphasized that while India has substantial trade, its ports are not preferred by container ships,particularly for routes serving Africa, Iran, and Eastern Europe. Even small reductions in shipping capacity can cause congestion at Indian ports, delaying container turnaround and driving freight rates higher . Perishable exports,like prawns,are among the first to suffer, along with agricultural and chemical exports.
India's reliance on foreign shipping lines,which transport 90-95% of its cargo,leaves the country vulnerable to global shifts in vessel deployment. Domestic container production remains limited,with India manufacturing only about 24,000 TEUs in FY24,a stark contrast to China's several million .
To combat this,the government has rolled out two initiatives to cut dependence. A ₹10,000 crore container manufacturing scheme, announced in the Union Budget for 2026-27, aims to increase domestic production tenfold. The first result of this initiative was unveiling of an India-made EXIM container by DCM Shriram Group on July 3 for Maersk,which has since placed an order for another 1,000 containers .
Location is key. Indian-made containers are about 20% more expensive than their Chinese counterparts, mainly due to transportation costs of moving empty containers to loading points. Manufacturing closer to ports like Dadri could help mitigate this cost disadvantage.
The second initiative focuses on establishing an Indian container shipping line. In February, the Shipping Corporation of India, Container Corporation of India,and port authorities of Jawaharlal Nehru, Tuticorin,and Chennai signed an MOU to create the Bharat Container Shipping Line, India's first national container carrier. While this move is seen as positive, industry watchers warn there's much to do before Bharat Container Shipping Line becomes operational, including route identification and fleet management.
