In a significant move, three union ministers – of shipping, railway and chemical and fertilisers – last week discussed matters to make India self-sufficient in sea container production. This is an issue that’s been on the radar of the Centre for many years but not much has happened. The trade is heavily dependent on China, which has a monopoly with over 90 per cent market share in containers globally.
The ministers dealt with building an ecosystem that can help domestic producers to produce Make In India containers to help the trade.
India’s trade suffered enormously due to container shortage starting in 2020 end due to Covid-related lockdown followed by Suez Canal blockade by a container ship in March 2021 leading to severe congestion at the ports of Europe and the US. This led to a container shortage, which was aggravated by the Ukraine war.
Critical issue
There is an urgency to revive container manufacturing to ensure that the trade does not suffer further any global eventuality. Last year, a proposal to set up an ecosystem at Bhavnagar in Gujarat was drawn, but it is still on paper.
With the Centre aggressively pushing its AatmaNirbhar Bharat (self-reliant India) programme, container manufacturing locally is also critical for its success.
Nearly two decades ago, India was one of the few countries that used to manufacture containers as containerisation started to flourish. Container manufacturers such as Balmer Lawrie (Chennai and Kochi); DCM Hyundai (Chennai) and HIM Containers (Kolkata) were shut down. Only DCM is making local containers in Delhi, said an official of a leading container leasing company.
India lost the race to China, which emerged as a dominant player in this space due to cheap labour, availability of abundant raw material and the ability to scale quickly. All these were missing in India.
Each container costs about ₹2.5 lakh. If made in India, the cost is cheaper by nearly 25 per cent. Concor alone has a requirement for approximately 50,000 containers in the next 3 years.
Prime manufacturer
India’s container manufacturing industry can take a cue from China by using scrap as a raw material. China originally became the prime manufacturer of ISO containers, firstly, because of low labour costs, later because of China becoming the steel recycling hub globally, then of course, they surged as the factory to the world. India could be competitive but it must become a larger steel recycler, said Ennarasu Karunesan, Maritime & Port Expert, and IAPH Regional Director.
Unlike other products, manufacturing of containers is economically more feasible in a market where exports are more than imports. Otherwise, it will make the business unviable as the freight cost to ship an empty container from one country to another could cost equal to almost 30-40 per cent of the market price of a container. This is one of the reasons for China becoming a hub for container manufacturing, he said.
Jagannarayan Padmanabhan, Practice leader and Director, Transport logistics and Mobility, CRISIL, said China has the entire ecosystem well built, the ISO container needs a special type of steel called Corten steel and the plywood used is also of a special kind. The labour productivity is far better in China in comparison to India. Financing terms are far better for them.
Make steel available at competitive prices and provide fiscal benefits for the plant and machinery, he added, on reviving container manufacturing.