The government is stepping in as the shipping shake-up exposes the vulnerability of containers

In a normal year, Iran buys nearly 4.5 million tons of basmati rice from India. “Now it is difficult for ships to pass through the Strait of Hormuz. The availability of vessels from Kandla or Mumbai to Iran is very poor,” says Prem Garg, president of the Rice Exporters Federation of India. Booking a 20-foot container with 26.5 tons of rice now costs about $5,000. “But we never know when the vessel will be available,” he says.

Uncertainty carries a steep price. R. Rajeshkumar, president of the Custom Broker and Shipping Agents Association, Coimbatore, recalls a customer who booked a container from Kochi to Iraq for $1,500. As the conflict in West Asia stuck with empty containers in major ports, it ended up costing $50,000 to acquire an empty container.

Coffee exporters face similar disruption. Most Indian coffee containers now travel around the Cape of Good Hope instead of through the Red Sea and the Suez Canal, says Ramesh Rajah, president of the Coffee Exporters Association of India. The diversion adds 10 to 22 sailing days and several thousand nautical miles. Shipping per container has climbed from around $1,200 before the crisis to $3,800 due to the detour, while international buyers continue to insist on pre-contracted shipping rates.

Across sectors, exporters are facing container shortages, fewer motherships and soaring shipping costs. Large container ships that used to call at Thoothukudi and Kochi have been steadily declining since Covid. Instead, vessels carrying up to 20,000 containers now mostly dock at Nhava Sheva.

“Shipping costs from Nhava Sheva are almost 50% lower compared to ports in the south and the time required is also less,” says P. Subramaniam, former president of Coimbatore Customs Brokers Association. As a result, more than 40% of the cargo that once moved via Thoothukudi or Kochi has shifted to Nhava Sheva.

Infra limitations

The problem was exacerbated by infrastructure constraints. Vallarpadam is still a few years away from full operation. Thoothukudi will be able to handle larger motherships only after the completion of its ₹15,000 crore Outer Harbor project. Meanwhile, Vizhinjam continues to focus mainly on EXIM cargo due to connectivity constraints. Shipping rates continue to rise. Shipping a container from Kochi to Jebel Ali has risen from $1,000 to $1,500 to nearly $7,000, with an increase of about $500 in the last three days alone. Rajeshkumar says Chinese exporters are finding it easier to secure containers due to stronger demand, while Indian exporters are paying heavily to reserve containers or reclaim empty containers stuck in hubs like Dubai, Khor Fakkan and Sohar.

The problem is structural, says Amitabh Kumar, former managing director of shipping. India has weathered five major shipping disruptions this decade – COVID, the Suez Canal blockade, the Ukraine war, the Houthi attacks in the Red Sea and now the Strait of Hormuz tensions.

Container transport operates according to fixed timetables. When routes become dangerous, ships divert, often around the Cape of Good Hope, extending the voyage by 10 to 12 days. Shipping lines also prioritize their busiest routes, especially the China-Europe and China-US routes.

“India has a lot of business here, but they are not popular ports for container ships,” says Mr Kumar, referring to routes serving Africa, Iran and Eastern Europe. Even a modest reduction in shipping capacity can clog Indian ports, delay container turnover and increase shipping rates. Perishable exports such as shrimp are among the first victims, while agricultural and chemical exports are also suffering as shipping capacity shrinks. “We don’t have the tonnage in India to replace the foreign container ships that are leaving ours out,” says Mr Kumar. Foreign shipping lines carry 90-95% of India’s cargo, leaving India vulnerable whenever global operators shift vessels elsewhere. Container shortages worsen as turnaround times increase.

Home production

Domestic container production also remains modest, limiting options for exporters. According to a Lok Sabha reply in March, India produced around 24,000 TEUs in FY24 compared to China’s output of several million annually.

The government has introduced two initiatives to reduce this dependence – one to expand container manufacturing and the other to build an Indian container shipping line.

The ₹10,000 crore container manufacturing scheme announced in the Union Budget 2026-27 aims to increase domestic production tenfold. The first result came on July 3 when an EXIM container manufactured in India by DCM Shriram Group for Maersk was unveiled in Dadri, which placed a follow-up order for another 1,000 containers. Location is the deciding factor, says Kumar. Containers made in India cost roughly 20% more than Chinese ones, as Chinese containers often arrive in India already loaded with cargo, which allows for shipping costs to be included in the cargo. Containers made in India must first be transported empty to loading points, adding to costs. Manufacturing closer to ports like Dadri can reduce this disadvantage.

The challenge, Kumar argues, lies not so much in manufacturing capacity as in bridging this cost gap through policy support.

The second initiative focuses on the ownership of shipping. In February, Shipping Corporation of India, Container Corporation of India and Jawaharlal Nehru, Tuticorin and Chennai Port Authorities signed a memorandum of understanding to set up Bharat Container Shipping Line, India’s first national container carrier. A shipping industry watcher welcomed the move, but warned that a significant amount of work remains before the BCSL is operational, including identifying trade routes, recruiting experienced liner shipping personnel, appointing agents, acquiring vessels and managing the fleet.

Published – 11 Jul 2026 23:04 IST