Consumer Durables Market Hit by Container Backlog in Shanghai Port

0

As containers pile up in the port of Shanghai due to China’s ‘no-Covid’ policy, India’s consumer durables market has been hit by the supply of stranded components for goods ranging from panels to television to refrigerators and washing machines.

Nearly 25-75% of white goods components come from China. Air conditioners are the most dependent with nearly 75% of components imported from China.



Durable consumer goods companies in India have been stocking up on components, but stocks could start to dry up from mid-May. The immediate fallout could be that some models could be out of stock and the situation could get even worse if the lockdown in China persists.

“There are still a lot of challenges at the Port of Shanghai. Supply shortages in all categories are surfacing. It is difficult to say how the situation will unfold from mid-May, but it could certainly get worse if the lockdown continues into June,” said Kamal Nandi, Executive Vice President and President of Godrej Appliances. Trade standard.

He added that it would take another three to four months for the situation to normalize once China lifts the restrictions.

Demand for summer products has improved two years after being wiped out due to Covid-induced lockdowns which impacted sales of refrigerators and air conditioners. Nandi says that while volumes are a bit higher than in the summer of 2019, sales in value terms have increased by around 15-20% due to higher prices.

Eric Braganza, president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA), said it was difficult to predict the extent of the impact the lockdown in China will have on the consumer durables industry.

“June could be bad if the lockdown continues in China, it’s very difficult to accurately predict the impact right now,” Braganza added.

He said the demand for summer products had increased significantly due to high temperatures across the country and an early summer.

Contract manufacturer, Dixon Technologies, has started to see improved shipments, but has faced component shortages for the past two to three weeks. “Shipments that have been delayed are already underway,” said Atul Lall, general manager and vice president of Dixon Technologies.

He added that due to high temperatures, May and June are expected to see strong demand for cooling products which have already seen a surge in demand.

Super Plastronics, the licensee of the Kodak, Thomson, Blaupunkt and Westinghouse brand in India, stocked up before the lockdown during the October-December quarter and the January-March quarter. “We increased our order quantities from China as we expected disruption and it worked for us,” said Avneet Singh Marwah, CEO of Super Plastronics.

Retailer Vijay Sales has yet to see an impact on merchandise reaching the store. “We haven’t seen a slowdown in product reaching the store as we had stocked up in anticipation of a good summer,” said Nilesh Gupta, Managing Director of Vijay Sales, adding that demand for summer products was extremely strong in March, but not as strong in April.

Gupta said sales volumes of summer products like air conditioners and refrigerators are at levels seen in the summer of 2019, but the value is higher due to price increases taken by manufacturers.

He also said that although demand was at the same level as in the summer of 2019, it was still low as the heat wave in various parts of the country should have boosted demand.

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor

Share.

About Author

Comments are closed.