Cost of shipping a container from India twice as much as that of China, report states.

15 Oct 2014 09:38
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International Shipping from India could cost almost twice as much as what it costs to ship exactly the same container from China, based on an article from the Associated Chambers of Commerce and Industry of India.

In a pr release , ASSOCHAM claimed the typical cost of shipping a container from India may be close to $1,200. The very same container from China would ship for $600, and for no more than $400 from Singapore, placing Indian exporters at a competitive disadvantage in the worldwide industry.

There are quite a lot of reasons for the greater charges, the group explained. One is that port proficiency in India lags behind most of the rest of the world. A ship’s turnaround time at India’s biggest port, Jawaharlal Nehru, is roughly 36 hours, whilst at the major ports of Shanghai, Singapore, and Dubai, it is below 12, according to ASSOCHAM. India’s ports also have higher cargo-handling fees compared to those other countries.

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Further driving up rates is India’s two-tiered tax system, which leads to items being taxed when they transit state as well as national borders. The government of recently elected Pm Narendra Modi is attempting to adjust the system by scrapping the two-tier system and changing it with a consistent nationwide tax.

Container rates are largely a factor of demand and supply of shipping capacity, however other factors for example ease of access and landside costs also can figure into overall costs.

ASSOCHAM also established the amount of stops a truck needs to make as another factor driving up expenses. Currently there are one hundred and seventy seven road checkpoints as well as 268 toll plazas on India’s roads, and toll lane automation is actually non-existent.

A disparity in hinterland national infrastructure is another factor. As stated by the World Bank, 63.7 % of China’s highways are paved, in comparison with 53.8 percent in India.

India and china both have fragmented, unconsolidated transportation markets that make savings through economies of scale tough to obtain. C.H. Robinson has projected that 99 percent of trucks in China are owned by individuals or families. In India, the logistics provider estimates 80 percent of trucks are operated by small organizations.

The more innovative infrastructure in China has made up for the governmental meddling and fractured trucking market that define both nations. The outcome, ASSOCHAM said, is a major difference in the costs of shipping containers from India and China.

Prime Minister Modi’s government appears to be aware of these issues, and has started to take action to improve things. Earlier this month, ground was broken on part of the Sagar Mala infrastructure upgrade at the Jawaharlal Nehru port. Modi has additionally instructed the Ministry of Shipping to make Sagar Mala its major goal, as stated by the Times of India .

The Sagar Mala project aspires to improve India’s development through the interlinking of sea ports via the development of road, rail and seaway connections. It also needs investments geared towards expanding sea port capacity and productivity.

Accompanying the order to the Ministry of Shipping was one to the Ministry of Road Transport and Highways. That order requested for the introduction of a task force to analyze automation at Indian toll plazas and checkpoints with the aim of reducing setbacks and the number of overloaded trucks on Indian roads. Automation of toll roads was one of many solutions proposed by ASSOCHAM to lower shipping costs.

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