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In the last few years, along with unprecedented supply chain disruptions, logistics professionals had to face another challenge-a serious shipping container shortage. Many containers were tied up at ports, storage facilities, and vessels worldwide due to government restrictions and regulations, the rising demand, port congestions, and closed manufacturing operations made the shortage worse. It was during these difficult times, India pushing for self-reliance, announced to be Atmanirbhar in producing world-class containers. We talk to Rudra Shriram, Director, DCM Containers (DCM Hyundai Ltd), to understand the odds that stand in the way of India becoming a container manufacturing hub.
Making a buzz in the industry is the recent announcement made by the centre to make Bhavnagar in Gujarat the manufacturing hub of India. What is your thought on this?
There is no official or clear mandate on that. It is at a very nascent stage. This is not the first time that the industry has tried to become a manufacturing hub for containers. About 30 years back DCM Hyundai set up manufacturing containers in India. A very large facility was set up in Chennai along with that many other companies also set up container manufacturing in different regions. But it didn’t pan out. What is to note is that the problems remain the same. The containers are mainly procured by shipping lines, but India does not have its own shipping line. So, we are always selling to other-which is great but for the shipping container ecosystem to work there has to be a very clear ecosystem and a thriving ecosystem between the manufacturer, the freight forwarder, and the exporting company. This is very prevalent in our direct competitor, China.
To make this work, we require an Indian shipping line, as without an Indian-owned shipping line, there is no primary procurer for the containers for a global position, otherwise internally it’s only CTO like CONCOR who are buying, and they have limited demand.
Container manufacturing within India is viewed as a solution to container shortage and eliminates the dependence of India on China. However, it is understandable that manufacturing container is not as simple as it seems. What are the challenges related to cost and raw material availability and permissions in India when it comes to container manufacturing?
The challenges faced are more about the economies of scale. Despite being among the largest manufacturer, we are not even 10% of what a single factory in China can make in a day. They can manufacture up to 250-300 containers in a day from a single point. If the industry grows these issues will surely be marginalized and minimized, if not completely at par.
Then the availability of raw materials is also a great issue. The corrosion-resistant steel which is required in the manufacturing of containers is not easily available in India.
What should be done to make the vision of India as a container manufacturing hub into reality (government support, industry initiatives etc.)?
Making it into a reality will depend on two things, one being the PLI Scheme-which is being talked about, but it is to be considered that is it just a blanket or a growth-based subsidiary or a viability gap funding.
When we talk about other nations (China), they give a lot of relief to the manufacturers. They have given subsidies on steel price, steel procured, land rental, and utility cost. With all the basic infrastructure already provided, the motivation to invest is much higher. This is where the Indian government needs to step in.
PLI will help the industry bloom in the initial stage and then the industry will chart its own path. It will attract more organizations and bring in healthy competition.
Price is often the deal-breaker for the Indian manufactured container. How can India be competitive against the world’s largest manufacturer, China?
It can be done by granting subsidies. The subsidy will automatically reduce the input cost and help bridge the gap between you and the price of your competitor (China). China produces over 90% of the world’s containers. One simple way to grow the industry is by banning Chinese containers. But is it possible with the current infrastructure, without suppliers? It’s not impossible. It can be done in a phased manner, and as an industry, we will step up in support. The government will have to prioritize Indian manufacturers over Chinese when buying containers until they stand on their own.
Is it right for India to pin its hope on container manufacturing to resolve the pain points like shipping cost, container shortage, availability, etc. of the Indian shippers and reach new heights in import-export?
Obviously, it is right to pin the hope on container manufacturing to resolve the pain points of the industry, as manufacturing takes care of the shortage. You need containers placed in India, at the Indian depots and ports to push cargo out, and when you can’t get containers from abroad so you build them internally, and create the infrastructure internally. And as our economy is growing in a paced manner, we are going to have more products to export and this will increase the demand for containers.
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