Container prices have shot up by up to 300 per cent in the past one month owing to geopolitical tensions between Israel and Iran following the former’s attack on Hamas, causing shortages and pushing consumer durables companies to increase prices.
Companies have planned increases but some are yet to decide on the extent of the increase.
“Inventory shortages, worsened by disruption in the Red Sea due to geopolitical tensions between Israel and Iran, are significantly impacting the logistics landscape.
"There is a noticeable shortage of inventories across China, especially in East and South China, compared to its demand.
"This imbalance has caused shipping container prices to increase by 150-300 per cent, depending on factors like lot size and material type, making it more challenging for businesses to secure cargo space for shipments,” Arjun Bajaj, director at Videotex, an Indian original equipment manufacturer/original design manufacturer, told Business Standard.
He said there was an upward trend in container costs, with prices changing every week and were expected to go up even further, with no clear timeline for resolution from freight operators.
This is affecting not only India but also the global supply chain.
The company has not decided on the price increase.
However, Super Plastronics, a Kodak brand licensee, is planning to increase prices by 3-5 per cent in June and another 3-5 per cent in July on its TV sets.
Avneet Singh Marwah, chief executive officer, said due to rising container prices, coupled with raw material prices shooting up, the company was forced to go in for another round of price elevation.
“This situation is similar to the one we faced during the pandemic years, where costs were constantly increasing and we were forced to make our products costlier,” he said.
Bajaj said: “The rise in costs has led to higher manufacturing expenses, increased working capital requirements, disrupted the cash flow, extended production timelines, and complicated delivery schedules.
"To address these challenges, we are strengthening our collaboration with logistics partners and implementing careful inventory management practices.
"Currently, Videotex has managed the situation, maintaining sufficient inventories to meet production demands for the next three months.”
B Thiagarajan, managing director, Blue Star, said China’s growth seemed to have revived and the US is also going to start witnessing growth.
“The world doesn’t have that much material to offer to cope with this growth.
"However, India is the hottest country in terms of growth,” Thiagarajan said.
The company raised prices by 3 per cent ten days ago and it would keep monitoring the situation.
If prices reduce then the company will roll back the price increase, he said.
Thiagarajan anticipates a huge shortage of raw material due to growth in various economies.
“You pay a price for growth. The price is going to be the waiting period and then there is going to be a cost attached to it.”
