News / India gets closer to China as tariffs hobble exports to the US

© Florin Seitan

Intra-Asia ocean carriers serving Indian trades have historically, in large part, thrived on booking demand out of China, being the production powerhouse for the region.

Indian imports from China have substantially expanded over the years, encouraging carriers to inject more capacity into the market to capitalise on the growing inbound leg, and also to gain an opportunity to reposition empty boxes back to the demand region.

For the first three quarters, through September, India’s imports, by value, were estimated to have hit some $91bn, from $80bn a year ago  according to available data.

Amid that buoyancy, the data also point to a steady uptrend in carrier rates for China to India.

Spot rates from Shanghai to Nhava Sheva and Chennai have increased 15% to 20%, on average, from mid-September levels, after cooling for a while. According to the data, most carriers are selling space from Shanghai to Nhava Sheva at $850 per teu and $950 per feu, up from $700 and $850, respectively, a month ago.

Shanghai-Chennai rates have also moved up, by between $100 and $150 per box, month on month, to $850 per teu and $950 per feu, and the freight yield for carriers out of other ports in China, ilike Tianjin, Yantian, Nansha, Ningbo and Qingdao, to India has strengthened by double-digit percentages.

Local industry sources believe the rate push has been driven by Indian festival demand for consumer goods, as well as recent local tax modifications.  Last month, India’s Goods and Services Tax (GST) structure was vastly modified to stimulate domestic economic activity, amid the US tariff-linked pressure on export trade.

“The aim is to boost the present businesses and start-ups and incentivise the youth to enter into businesses and initiate startups,” explained a government statement.

The reform has, arguably, been a sweetener for white goods sales, the bulk of which are imported from China, with early retail estimates reflecting a 50% surge in business for that segment since the tax modification.

Additionally, India and China have vowed to expand bilateral trade, a counter-balance strategy as US tariffs threaten to redefine supply chains out of Asia. That followed rounds of talks as officials tried to repair the strained relations.

“India and China are trying to steady their relationship and restart trade ties at a time when global markets are unsettled by US tariffs,” Pushpank Kaushik, CEO of Hyderabad-based maritime group Jassper Shipping, told The Loadstar.

“With Washington restricting key Indian exports, stronger access to Chinese markets, smoother trade, and supply chain co-operation could help India reduce its reliance on the US,” he added.

More regional carriers with Chinese stakeholders, notably CULines, have entered the trades out of India in the past few years, sensing potential for growth.

Following its debut in 2023, China state-owned Sinotrans Container Lines (Sinolines) recently indicated plans to expand its Indian footprint by adding new port pairs within Asia.  It currently runs a Far East-East India connection under a vessel-sharing agreement (VSA) with Sealead, TS Lines and SITC, on a rotation of Qingdao-Shanghai-Ningbo-Shekou-Chennai-Visakhapatnam-Port Klang-Shekou-Qingdao.