With the coronavirus outbreak showing no signs of abating, electronic goods makers and automobile manufacturers are having to shell out more for flying down spares and components from China and South Korea, on chartered flights.
Buffer stocks have depleted and the usual transportation modes from the region have been affected. Scheduled air transportation of cargo has become has been thrown out of gear as several global airlines have stalled flights to these countries, with chartering the last resort.
Cargo operators said that the number of chartered flights and the cost is only going to increase in the coming weeks and months, as the shortfall in supply reaches critical levels.
Consumer electronics, Automobile makers as well as pharmaceutical firms in India specifically rely on China for raw materials supply and provision of parts like compressors, electronic components and sensors.
India’s Ministry of Electronics and Information Technology (MeitY) has told the industry to detail the spare parts that are in short supply.
Entire production lines can be disrupted if a small but critical component goes out of supply, experts said. As a result, manufacturers have been compelled to opt for the charter route to keep the factories running.
Logistics major DHL Global Forwarding India has been coordinating with its global team to run chartered flights from China which would help customers with continuity in their production lines.
With rising input costs, the prices of end products are already witnessing an increase.
All the main electronics makers are jacking up their prices by 3-5% due to a scarcity of parts, the ET had reported earlier. Out of this, around 1 percentage point increase is due to the additional cost of bringing components by flight, B Thiagarajan, managing director of air conditioner maker Blue Star, told ET.
Many Chinese suppliers have resumed production but it could take a few weeks before normalcy is restored.
―The News Minute