Buffer stocks at their facilities have run out and usual transportation modes from the region remain clogged. Many global airlines have all but stopped operating to these countries, making scheduled air transportation of cargo impossible, with chartering the only option.
The coronavirus, which originated in China, has so far claimed over three thousand people. The number of infected cases has shot past a lakh already.
Cargo operators and freight forwarders said the number of such flights, as well as the cost of chartering them, will increase this month as the crunch in factories becomes critical.
“The usual prices are $220,000 per 100 tonnes of cargo flown. The special charter flights are charging at least 125% more,” said Shailendra Seth, country manager at global air charter operator Chapman Freeborn. “We have facilitated several flights in the last week ferrying 100 tonnes of cargo each.” Seth said the chartered flights are primarily coming to the Mumbai and Chennai airports.
These flights have been commissioned largely by Southeast Asian companies present in India to fly in parts from facilities in China and South Korea, he said.
Seth expects the number of such chartered flights to increase by March-end as stocks dip further.
Makers of automobiles, consumer electronics, and pharmaceuticals in India, especially rely on China for supply of several raw materials and parts like compressors, electronic components and various sensors.
India’s ministry of electronics and IT has asked the industry to provide it with a list of spares that are in short supply. Lobbying bodies at the automotive industry are also collating such lists.
Even if a small but critical component or part goes out of supply, whole production lines can come to a halt, experts said. To keep the factories going, manufacturers have been forced to take the charter route.
Global logistics major DHL, too, has arranged for these charters.
“With a view to assisting our customers, DHL Global Forwarding India has been working with its global team to run charters from China which would help customers with continuity in their production lines,” said Niki Frank, chief executive officer at DHL Global Forwarding, India.
The spurt in input costs is already pushing prices of end products higher and this is likely to worsen.
Almost all major electronics makers are increasing prices by 3-5% due to a parts shortage, ET reported on February 27. Of this, an about 1 percentage point increase is due to the additional cost of flying in components, said B Thiagarajan, managing director of air conditioner maker Blue Star.
Normalcy is still not in sight.
While many Chinese suppliers have now resumed production, it is still not at full capacity, said Guenter Butschek, managing director of Tata Motors. Equally important, the supply chains were disrupted, and it will be a few weeks before normalcy returns, he said.
Seth of Chapman Freeborn said that a week earlier it was impossible to operate even charter flights to China due to lockdowns in various regions.
He added that pilots and crew have to take extreme care while operating these chartered flights. They don’t disembark from the flights while loading and unloading of cargo.
The Tata Motors head said it would take about 90 days to replenish the supply chain through normal sea freight and his company would have to make the “tough call” of airlifting some components in the short run. He did not clarify whether the increased cost would be passed on to consumers.
Automakers import components like turbochargers and various electronics components including sensors from China and South Korea.
