To Our Valued Customers:
Market Update – India
Market conditions in India continue to struggle due to structural and market impacts resulting from the outbreak of the COVID-19 pandemic. Much like other significant trade lanes throughout the world, India has seen this impact the transportation sector especially hard.
Air Freight
The India outbound airfreight market is mostly comprised of passenger aircraft, of which up to 80% have been taken off-line due to COVID-19. Even during normal pre-Covid conditions, airline space during monsoon season (June-Sept) is critical and most airfreight shipments are subject to backlogs and “priority” service rates. These conditions have exacerbated a usually painful time of year for air cargo exports from India.
Ocean Freight
At the onset of the COVID-19 outbreak, ocean carriers reacted to the huge drop in volumes by reducing services and blanking sailings. As the country began to open up again in June there was a large unanticipated surge in cargo. With earlier reductions in carrier capacity this increase demand aggravated an already challenged supply situation. Although services are being restored recovery will still take time. The following factors are contributing to the current capacity constraints:
Empty container inventory – As a result of the drop in India imports equipment available for exports is in short supply. Empties are coming in but availability is a concern in the coming weeks.
Ports – Ports are operating at less than full capacity due to congestion and reduced staffing levels.
Inland Container Transit - Trains are moving but service is less than normal - delays are occurring and expected to continue. Inland ICD’s (Interior Container Depots) are experiencing shortages of available container inventory.
COVID-19 - The number of Covid cases is rising. Individual Indian states are now taking local decisions and shutdowns are implemented on state wide levels rather than on all India country level.
As a result of these conditions, we expect short term capacity issues to continue and freight rates to rise in August. We strongly suggest to work with your suppliers and supply chain partners to provide updated forecasts and arrange bookings with a minimum of 2-3 weeks advance notice.