As US importers purchasing from Asia and Europe have discovered, container shortages are but one of three key challenges for companies this year along with blanked sailings and soaring rates that in some cases have broken through the four thousand dollar barrier on the westbound transpacific.

 

What we don’t think of, though, is the cascading effects caused by troubles elsewhere in the globe affecting other economies and consumers, and that is exactly what is happening right now between India and China which has repercussions throughout the rest of the world.

 

In June, the Chinese army entered Indian-held land in a disputed area on the countries’ mutual border and killed more than twenty Indian soldiers.

 

Indian Prime Minister Modi, who had already been focused on increasing the country’s manufacturing base while reducing reliance on other countries, was incensed. The second or third largest importer of goods from China in the world, any changes in the India / China relationship would be impactful to global trade.

 

The Indian government imposed additional, higher taxes on imports from China, leaving importers in that country facing higher duty bills. They have also banned nearly 60 Chinese apps – including TikTok and WeChat – with eyes on banning sixty more. 

 

These aren’t just days-long delays. These delays are lasting weeks or months and adding costs for demurrage, detention and storage. Some companies are paying while others are abandoning goods. Indian importers are mirroring the efforts of their US counterparts – turning to Vietnam and Indonesia for sourcing, but with the same challenges of manufacturing capacity, quality of goods and availability of containers and vessels in lesser developed economies with far from comparable infrastructure.

 

While their increased duty action parallels the US under Section 301, what differs significantly is that Indian’s Customs agency is inspecting fully 100% of containers imported from China. 

 

The combination of higher duties and delays in examination is leading to a shortage of export containers which can be loaded with Indian exports and shipped to markets like the United States. 

 

For Indian exporters in key industries like garment manufacturing, this has led to a change of their customer base and shipping patterns. They have looked to closer buyers in Indonesia, Vietnam and other cheaper Asian countries where the financial situation is both more stable and the rates haven’t soared through the stratosphere – India to any major inland IPI point in the United States is more than than 75% higher than Asia / USWC port rates – and that is without a space guarantee.

 

While Mach 1 cannot affect the disputes between countries, we can counsel our importer and exporter customers as best as we can to help mitigate these impacts to their supply chains. Here are three things to keep in mind.

 

Pick the best time to import.

If your company is importing from India, analyze the best time to buy. We are hearing rumors that rates will drop in October following the Chinese autumnal holidays. If you can’t wait, then be prepared to pay the going market rate which is today at premium levels.

 

US importers should move the most urgent goods by air freight.

Transit times from India to the United States were already longer than those from Asia to the USWC. Many Indian services rely on transshipment services via Singapore or Sri Lanka and time waiting for a connecting vessel only adds to overall time in transit. 

 

Identify the goods which cannot afford to be late and move that small segment by air while allowing the balance to move by sea.

 

The India / China dispute is made more complicated by the land border problem.

 

For Indian wholesalers, they are completely dependent upon Chinese products. Buy low, sell high – it’s how they survive. If conditions worsen with further increases in duty or an outright ban of imports from China altogether, companies will suffer even more. 

 

India is currently divided into two camps on how they feel the government should handle the issue, but both sides support the effort to move goods production to India. What was most obviously missing before this all began was a plan.

 

Mach 1 is committed to our customers in India, North America and around the world. We realize that economic decisions are directly impacted by choices made by governments on how to trade between each other or on the world stage. Our responsibility is to continue to monitor these events, educate as best we can and find the most cost-effective ways to solve the challenges that arise and keep cargo moving between buyers and sellers. To see how Mach 1 Global can assist you call (800) 553-7774 or get a quote by clicking HERE.

INDUSTRIES WE SERVE

Ready to ship?

Get started with Mach 1 Global Services today!