Trade Between the U.S. and India Soaring to Record Highs

When we think about international shipments and U.S. imports, one country generally comes to mind – China. Its one of the biggest exporters of retail goods, components, machinery, and technology, not only to the U.S., but to the whole world. However, in recent months, we’re seeing a bit of a shift regarding U.S. import activity coming from elsewhere – India.

While we’ve long been involved with India for international trade, our channel of activity has been overshadowed by that of the U.S.-China trade routes. That has been rapidly changing over the last couple of years.

In 2021, there was an increase of 23.5 percent for containerized cargo activity between the U.S. and India. But this record high continued to surge through 2022, as the first six months of this year saw an 8.3 percent increase year-over-year in activity between the two countries, indicating that trade relationships and demand on both sides continue to rise.

There are a lot of reasons that the cookie is beginning to crumble between the U.S. and China. While trade will always remain strong between the two, as China is the primary production hub for the world, there are a slew of factors playing into the diversion of trade activity. Tariff conflicts, increasing labor costs, and Beijing’s zero tolerance COVID-19 policies continue to put entire industries and sectors in lockdowns, making shipment activity unpredictable and thus unreliable.

In addition to the complications experienced by China, improvements in industrial productivity thanks to training and automation have decreased manufacturing costs in India. For the most common items such as garments, Christmas décor, and textiles, cargo coming out of India is currently around 30 percent cheaper than goods coming from China.

Much of the drastic increase in activity between the U.S. and India was spurred on by major retailers such as Walmart, JCPenney, Target, and Amazon reallocating large orders from China to India. These companies wanted to stock up their inventories before the busy holiday season comes around, and with the state of Chinese trade and the various COVID-related interruptions, working with India for U.S. imports was not only cheaper – it was also a more reliable option for U.S. companies.

At this point in time, many industry experts and U.S. international trade workers are expecting the shipping activity between India and the United States to continue increasing through the rest of this year and into the next. As relationships between retailers and suppliers begin to grow between the two countries, freight rates for ocean and air out of India are also continuing to drop, making it a more affordable option on both the manufacturing and shipping side of things.

Luckily, carriers have recognized the increase in trade between the U.S. and India and have allocated additional vessels and equipment to those routes to increase efficiency and decrease spot rates, thus driving demand up further.

Looking Ahead

If you would like more information regarding this topic, contact our team at InterlogUSA and we will be happy to assist you on any questions or comments you may have! In addition, we have our weekly market updates that can provide you with relevant freight news, updates, developments across the industry, and more.