Micro, Small, and Medium Enterprise (MSME) exporters across India, particularly those in manufacturing hubs like Coimbatore, are currently grappling with an unsustainable surge in international freight costs and acute container shortages, threatening their viability and global competitiveness.
V. Rangaswamy, president of the Coimbatore District Small Industries Association (CODISSIA), recently highlighted the critical situation, stating that MSMEs lack the financial margin to absorb these steep hikes, with exporters of perishable goods facing additional burdens due to prolonged waits for containers.
The Global Supply Chain Quagmire
The current crisis stems from a complex interplay of factors that have destabilized global supply chains since late 2020. The initial shock of the COVID-19 pandemic led to factory shutdowns and port congestion, creating a backlog that has yet to fully resolve.
As consumer demand for goods rebounded sharply, particularly in Western economies, shipping capacity struggled to keep pace. This imbalance was exacerbated by labor shortages at ports, inland transportation bottlenecks, and the uneven distribution of shipping containers globally.
Before the pandemic, MSMEs often relied on predictable, competitive freight rates to factor into their export pricing. Today, these rates are volatile and significantly higher, sometimes increasing by 200% to 400% on key routes compared to pre-pandemic levels, according to industry analysts.
Eroding Profit Margins and Competitiveness
For MSMEs, which typically operate on thinner profit margins than larger corporations, the escalating freight costs are not merely an inconvenience but an existential threat. These enterprises often lack the bulk purchasing power or dedicated logistics departments to negotiate preferential rates with shipping lines.
