For the exporters in the Micro, Small and Medium-scale Enterprises (MSMEs) segment, freight costs that went up because of the U.S.-Iran-Israel war continues to be a burden.

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The cost for a 20 TEU container from Thoothukudi or Kochi to Colombo, which used to be $400, is now $600. There is no sign of the prices reducing yet, said V. Rangaswamy, president of the Coimbatore District Small Industries Association (CODISSIA).

“The containers that are stuck at the ports in the West Asian countries are absent in the market, leading to shortages. This is also pushing the costs up,” he said.

For MSMEs in the engineering sector, steel prices are up almost 30%, copper and brass prices have doubled, and packaging prices have shot up. “The MSMEs do not have the margin to bear the steep hike in freight costs. Further, those who export perishables are hit by the wait for containers,” Mr. Rangaswamy said.

The garment exporters in Tiruppur say that freight costs were up almost 200% for shipments to the U.S. and the European Union. It has started reducing now. In the case of exports to the West Asian countries, the cost for a 20 TEU container was $300-$350 and is now $4,500, and for a 40 TEU container, it is $5,900 from approximately $700. Further, the shipment period is two weeks longer, they say.

While a few buyers have come forward to share the costs, most of them do not. “The buyers are also under stress as inflation is up in their countries,” added Mr. Rangaswamy.

According to Pankaj Chadha, chairman of EEPC India, freight costs have seen a “dramatic increase” and is a big problem to the exporters. The wait for containers for shipments to America and South American countries is almost two weeks, he says. Though the exporters raised this issue with the Union government, there is no relief. “Freight costs cannot be regulated and the buyers are not willing to share the costs. So, we have no option but to bear the costs. This is similar to the COVID time when the freight costs went up,” he said.

For the exporters in the MSME segment, the uncertainties and cost escalations have hit operations and is leading to losses, say the industry representatives.