In a pr release , ASSOCHAM claimed the normal cost of shipping a container from India could be close to $1,200. The same container from China would ship for as much as $600, and for only $400 from Singapore, placing Indian exporters at a competitive disadvantage in the worldwide industry.
There are lots of reasons for the higher charges, the group mentioned. One is that port productivity in India lags behind much of the rest of the world. A ship’s turnaround time at India’s largest sea port, Jawaharlal Nehru, is nearly 36 hours, whilst at the main sea ports of Shanghai, Singapore, and Dubai, it is under 12, according to ASSOCHAM. India’s ports also have higher cargo-handling costs in contrast to those other nations.
Further moving up prices 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 selected Pm Narendra Modi is attempting to reform the system by scrapping the two-tier system and changing it with a uniform national tax.
Container costs are largely a factor of demand and supply of shipping capacity, however other factors such as ease of access and landside costs could also figure into overall costs.
ASSOCHAM also revealed the number of stops a truck has to make as another factor sending up charges. There are 177 interstate checkpoints and another 268 toll plazas on India’s roadways, and toll lane automation is virtually non-existent.
A imbalance in hinterland infrastructure is yet another factor. According to the World Bank, 63.7 percent of China’s roadways are paved, compared with 53.8 % in India.
India and china have fragmented, unconsolidated transportation markets which make savings through economies of scale hard to achieve. C.H. Robinson has predicted that 99 percent of trucks in China are owned by individuals or families. In India, the logistics provider reports 80 percent of trucks are run by smallorganizations.
The more advanced national infrastructure in China has made up for the governmental meddling and fractured trucking market that define both nations. The result, ASSOCHAM mentioned, is a major difference in the costs of International Shipping from India and China.
Prime Minister Modi’s government appears to be aware of these issues, and has begun to take steps to improve things. Earlier this month, ground was broken on part of the Sagar Mala infrastructure upgrade at the Jawaharlal Nehru sea port. Modi also has instructed the Ministry of Shipping to make Sagar Mala its key goal, as stated by the Times of India .
The Sagar Mala project aspires to improve India’s progress through the interlinking of ports via the continuing development of road, rail and seaway connections. It also demands investments aimed towards increasing port capacity and productiveness.
Accompanying the order to the Ministry of Shipping was one to the Ministry of Road Transport and Highways. That order requested the introduction of a task force to study automation at Indian toll plazas and check points with the aim of minimizing setbacks and the number of overloaded trucks on Indian roads. Automation of toll roads was one of many solutions recommended by ASSOCHAM to reduce shipping costs.