Saturday, 2nd December, 2023
Saturday, 2nd December, 2023

Carmakers face production losses due to shipping disruptions

Increase in shipping freight rates and inadequate availability of containers globally may disrupt supply chains and impact production of automobile companies in the country, said industry body Society of Indian Automobile Manufacturers (SIAM).

Industry officials say fares have risen by 50-100% and some companies have almost doubled container rates, even taking refuge in part-time transport by air.

This has led to cost overruns and loss of revenues for exporters leading to estimated fourth-quarter cost overruns of $ 1-1.5 billion in a month.

Meanwhile, automakers have called for an increase in the list of vendors that are adding substantial amounts to working capital expenditures.

“Shipping fares have been steadily rising since July 2020 and have reached a point where our members find it almost impossible to carry on normal trade activities,” confirmed Rajesh Menon, Director General of SIAM.

Trade imbalances and lockdown restrictions at various ports have created a container crisis in India. Container shortages are creating double hate for exporters as export delivery creams, while shortages have reduced shipping rates which could depend on the profits of exporters.

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