Increased Logistics Costs Strain Auto Component Industry, Says ACMA

The Automotive Component Manufacturers Association (ACMA), the representative body of Indian auto component manufacturers, declared on Thursday that logistics continue to be a major obstacle despite a rise in export demand. The Red Sea crisis and other geopolitical events are causing disruptions to the automobile component supply chain and demand. According to Shradha Suri Marwah, President of ACMA and CMD of Subros, "the Red Sea, which handles nearly 30% of the world's shipping container traffic, is currently facing a crisis that has led to the diversion of routes and congestion at alternative ports." The current crisis is causing an increase in time, inventory, and export costs, which is directly affecting Indian automakers. Working capital is being impacted by the delays, longer time to market and production, and higher inventory brought about by the problems at the ports in Singapore and the Red Sea. Companies are choosing other routes, including those via Singapore Port, in response to these inconveniences. Deliveries in the supply chain have been delayed by around seven to fourteen days as a result of the abrupt spike in traffic at these alternate ports. "Despite the overall merchandise export decline from India in FY24, auto component exports have grown amid geopolitical challenges