Domestic Container manufacturing : CONCOR impacted due to slow pace

NEW DELHI: India’s bid to become a new destination for cargo container manufacturing is yet to gather speed with Container Corporation of India Ltd (CONCOR), India’s biggest buyer of steel boxes, lamenting that the ecosystem for making containers was “taking time” and a resultant shortage of containers has become a big “constraint” in its plan to grow the local business to neutralise the sluggishness in the export-import trade.

Theideatomakecargocontainers locally was taken after India’s exportimporttradesufferedahugeshortage of steel boxes in the wake of the pandemic-induced supply chain disruptions. It was also aimed at cutting India’s dependence on China, the world’s largest maker of containers, in the face of a flare-up alongtheborder.

CONCOR placed orders with local firms including Bharat Heavy ElectricalsLtd,Braithwaite&CoLtd, Mazagon Dock Shipbuilders Ltd and APPL Containers Pvt Ltd, for manufacturing some 19,000 containers under the Atma Nirbhar Bharatinitiative.

“But the ecosystem development is still taking time. The container manufacturing is not goingatthepacewhichweexpected and which we want. So, there is a shortage of domestic containers,” Mr. V Kalyana Rama, Chairman andManagingDirector,CONCOR told analysts during the fourth quarter and annual results earningscallon19May.

Railway Minister Shri Ashwini Vaishnaw told Parliament in April that CONCOR was “facing some problems in supply and procurement ofdomesticcontainers”.

CONCOR, Vaishnaw said, had placedordersfor19,000containerson seven indigenous container manufacturers located in Andhra Pradesh, West Bengal, Chhattisgarh, Punjab,Maharashtra,andGujarat.

Till 31 March 2023, about 500 containers have been delivered to CONCOR, Vaishnaw told Lok Sabha on5April.

Stagnating trade and a ballooning surplus of shipping containers, following easing of pandemic era supply chain constraints, has led to a collapse in global newbuild container output, which is forecast to slump to its lowest level in 14 years, said Drewry Shipping Consultants Ltd, a London-based independent maritimeresearchconsultancy.

Kalyana Rama at CONCOR said that India’s export-import scenario was“notveryencouraging”.

“The Indian exports are under strain, like handicrafts are not going andmerchandiseexportsareless.

Except primary agro exports, other exports are less, and a lot of empty-container inventories are buildingupinIndia,”hesaid.

With the export-import volumes facing headwinds as Western economies grapple with an impending recession, CONCOR is banking on domestic trade to drive growth.

“We are doing very well in the domestic sector. This is the third year where we could see good growth in domestic business. On the revenue side,wegrewby25percentandonthe volume side by almost 15 percent. This year (FY24) also we are working out to grow in the same manner. But the main constraint is container availability,”KalyanaRamastated.

The shortage of domestic containers has hampered CONCOR’s plantorampupshipmentofcementin steel boxes, a business it had entered recentlyandhasshowngoodtraction.

CONCOR transported some 3,800 containers loaded with cement last year with March alone accounting for about800containers.

“There is a lot of interest. The business has stabilised, but shortage of containers is a major issue. So, we are not really pushing it very fast. We require 25,000 more containers. But the Indian container manufacturing industry is yet to pick up. So, we are working in a balanced way,”KalyanaRamaremarked.

“Asofnow,weareabletomaintain oursupplylines,buttogrowfasterwe requiremorecontainers.

So, we are working on different aspects like getting some containers onlease,”hesaid.

CONCOR is also “working on” runningdoublestackcontainertrains on the domestic sector to improve margins.

Despite the slow pace of manufacturing and delivery, CONCOR will place orders for more containers to encourage new manufacturers to enter the sector by tapping the interest generated in the business,headded.